Analysts at the bank said that despite bitcoin’s monster rally, the cryptocurrency is still beset by a number of issues that may prevent it from becoming a mainstream asset.
“But fintech innovation and increased demand for digital services are the real Covid-19 story with the rise of online start-ups and expansion of digital platforms into credit and payments.”
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.
JPMorgan’s own strategists say that bitcoin could rally as high as $146,000 as it competes with gold as a potential hedge against inflation in the coronavirus crisis.
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.
Major tech companies like Apple and Google have shown increased interest in financial services lately. Apple launched its own credit card in partnership with Goldman Sachs, while Google is letting its users open checking accounts following a tie-up with Citigroup.
“Traditional banks could emerge as endgame winners in the digital age of banking due to their advantage from deposit franchise, risk management and regulation,” JPMorgan said.
Digital banking has boomed in the coronavirus era, with large lenders and fintechs alike seeing a surge in adoption as people are spending more time at home due to public health restrictions.
Reference: CNBC
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