The increased attention from institutional investors has been a game-changer for Bitcoin this year. Some analysts even believe that a greater influx of these investors could propel the asset to a 1,000 percent gain in the coming years.
The Big Bucks Keep Coming In
Earlier this month, analysts at top investment bank JPMorgan published a report suggesting that Bitcoin is poised to see record gains in the future if acceptance from institutional investors continues. If this happens, the asset could eventually beat out gold once and for all.
JPMorgan’s paper began with an acknowledgment of Bitcoin’s rise within the past month – a period where the asset moved from the mid-$11,000 level to over $15,000, per data from CoinMarketCap. The analysts rightly attributed much of this rally to the top payment processor PayPal, which announced mid-October that it would provide cryptocurrency transaction services from 2021.
PayPal has touted its upcoming crypto offering for the better part of three weeks now, and JPMorgan analysts explained in their report that this should bring more attention to the top cryptocurrency.
Focusing on institutions, JPMorgan highlighted New York-based asset management giant Grayscale Investments, whose Bitcoin Investment Fund has soared to reach over $4 billion in assets under management. JPMorgan believes that this company’s ascent shows a growing demand from institutional investors and not just individual buyers.
“These institutional investors appear to be the biggest investors in the Grayscale Bitcoin Trust, perhaps reflecting their preference to invest in Bitcoin in fund format,” the report highlighted.
The analysts also pointed out the parallels between Bitcoin’s continued boom and what appears to be a glut in gold markets. While Bitcoin kept soaring, gold-based exchange-traded funds (ETFs) saw modest outflows in October. As JPMorgan analysts believe, this shows a possible exodus of investors from gold and into Bitcoin.
Right now, the prediction is that a sustained status quo would lead to substantial price gains for Bitcoin. We could get to a point where Bitcoin’s market capitalization crushes that of gold, solidifying the top cryptocurrency’s place as the world’s most valuable alternative asset.
Bitcoin is a Lock for the Long Term
This is just the second optimistic report from JPMorgan on Bitcoin in the past few weeks. Towards the end of October, the New York-based investment bank’s Global Markets Strategy published a report highlighting that the asset had substantial long-term potential.
Like last week’s report, this one also came after the PayPal announcement. In it, the bank explained that Bitcoin had a bright future, especially since Millennials are poised to take up a more significant share of the investor market.
The bank also highlighted that Bitcoin had shown its utility. Amongst other things, this means that the asset is much more than just a fad. While gold remains about ten times as valuable as Bitcoin (considering market capitalization), increased prominence for the latter is inevitable.
With more uses for Bitcoin and blockchain technology, as well as greater adoption (especially from institutional investors), Bitcoin is poised to break new ground in the coming years.