Investors have drawn comparisons between bitcoin and gold, viewing the former as a new digital store of value thanks to its limited supply — the total number of bitcoins that will ever exist is capped at 21 million.
Still, skeptics remain unconvinced. Economists like Nouriel Roubini say that bitcoin and other cryptocurrencies have no intrinsic value. And a recent Deutsche Bank survey said investors view bitcoin as the most extreme bubble in financial markets.
JPMorgan’s strategists said current bitcoin prices appear to be “unsustainable” unless the cryptocurrency becomes less volatile. They added their $146,000 price target hinged on bitcoin’s volatility “converging to that of gold,” which would likely take years to happen.
Meanwhile, cryptocurrencies have “questionable diversification benefits” and rank as the “poorest hedge” against significant drops in stock prices, JPMorgan’s analysts said.
The rise of digital finance and demand for fintech alternatives is the “real financial transformation story of the Covid-19 era,” according to JPMorgan.
“Competition between banks and fintech is intensifying, with Big Tech possessing the most potent digital platforms due to their access to customer data,” the bank said.
“‘Co-opetition’ between ‘Fin’ and ‘Tech’ players lies ahead, with banks stepping up investment to narrow the technology gap, and the battle between US banks and non-bank fintech is also playing out on the regulatory front.”