Bitcoin keeps rising at an incredible pace.
This Thursday, the cryptocurrency surged more than 10% and hit $40,000 for the first time, doubling its value in less than a month and pushing the total market value of cryptocurrencies beyond $1 trillion.
In 2020, bitcoin jumped more than 300%, closing the year at about $29,000. It means that in less than ten days, the price added $11,000.
In a note published Monday (Jan 4), JPMorgan said that bitcoin price could reach $146,000 in the long-term.
“A crowding out of gold as an ‘alternative’ currency implies a big upside for bitcoin over the long term … A convergence in volatilities between bitcoin and gold is, in our mind, a multiyear process. This implies that the above-$146,000 theoretical bitcoin target price should be considered a long-term target, and thus an unsustainable price target for this year,” says the note.
Some experts believe the JPMorgan outlook helped to drive the rally in the cryptocurrency this week.
Early December, Bloomberg published a report saying bitcoin could hit $50,000 in 2021. By then, though, its price was around $20,000, half the current value.
Bitcoin accounts for about two-thirds of cryptocurrency market value, followed by Ether, with around 13%, according to CoinGecko data.
According to researcher Flipside Crypto, active bitcoin accounts are nearing their all-time high levels of late 2017, when its last boom began imploding.
The current concentration of the cryptocurrency in a few accounts is very high, which means that a few big trades can significantly impact the price. Less than 2% of accounts hold 95% of the bitcoin supply.
Some experts say that the current surge is different from the last one, in 2017, when it was driven by new – and short – interest from investors in Asia. Investors in general, including companies and the asset management industry, look today at Bitcoin as an alternative investment for the long term.
Advocates of the digital currency argue it offers a hedge against dollar weakness and the risk of faster inflation, like gold.
The influx of a lot of money in the markets, a consequence of fiscal and monetary stimulus worldwide, is also seen as one reason for the rally.
It’s important to be aware that bitcoin is an investment not suited to all since it’s highly volatile, and it’s market isn’t regulated yet.
On Monday (Jan 4), for instance, its price dove 17%, the biggest drop since March, after reaching $34,000 for the first time over the weekend.
Launched in early 2009, bitcoin is a currency backed only by its computer network.
Plus, digital currencies are not regulated yet, because, technically, they are not considered to be electronic money according to the law.