Bitcoin (BTC) gets a $ 1 million price call – but there are risks ahead

GUANGZHOU, China – Bitcoin could rise to $ 1 million over the long term to become a reserve currency for the world, according to one asset manager.

But JPMorgan warned of future risks as the cryptocurrency continues to accumulate.

Anthony Pompliano, co-founder and partner at Morgan Creek Digital Assets, said bitcoin could hit $ 500,000 by the end of the decade. Eventually it could reach $ 1 million for each coin, he said, without providing a timeline.

“I think bitcoin will eventually become a global reserve. I think bitcoin will eventually be a lot more than the gold market captain,” he said through the latest episode of CNBC’s “Beyond the Valley” podcast.

At the same time, the world’s central banks have been easing monetary policy – such as reducing interest rates and buying assets through the so-called quantitative easing program – to help deliver the blow to economies hit by a pandemic coronavirus.

“There were trillions of dollars printed and imported into the economy and everyone from individuals to financial institutions and corporations around the world ran in search of the best. protected their purchasing power, they ultimately decided it was bitcoin, “Pompliano said as he discussed the reasons behind the rise of bitcoin.

The bitcoin bull’s prediction that bitcoin could hit $ 1 million is based on a few factors including the scarcity of the cryptocurrency with a cap of 21 million coins, as well as the decentralized nature of the technology.

There is no central authority like a central bank that controls bitcoin.

Instead, the so-called bitcoin network is made up of miners who process transactions. These miners operate a wide range of specialized computers needed to perform a bitcoin mining process.

Because there are so many miners, one group cannot control the network. And because the computers they use are often very powerful devices, bitcoin supporters say the network is one of the strongest computer networks in the world.

“As more and more people enter the market, there is more liquidity. Because there is more liquidity, there is more convenience. Because there is more convenience, there is more stability in the price… get you kind of evolve this, “said Pompliano.

“If you think about that internet economy, airgead indigenous money (bitcoin) is ultimately not the seat of the kingdom to be that global reserve currency of the internet generation. “

In January, JPMorgan issued a note to clients setting a “theoretical” long-term price target for bitcoin of $ 146,000 as bitcoin begins to compete with gold.

Gold is widely regarded as a “safe haven” asset where investors come to it in times of political conflict or financial market turmoil. Bitcoin is now starting to develop such a reputation.

“Bitcoin competes with traditional gold, bitcoin is a form of digital gold,” Nikolaos Panigirtzoglou, global marketing strategist at JPMorgan, told CNBC’s “Beyond the Valley”.

He said the value of gold to the private sector, just for investment purposes, is around $ 2.7 trillion. To reach that bitcoin market cap, it had to hit a price of around $ 146,000.

But there are recordings, with the largest one being so volatile in the price of bitcoin. The digital coin is notorious for wild price movements. Panigirtzoglou said bitcoin is “five times more volatile than gold.”

Institutional adoption is the key to bitcoin’s volatility in tandem with gold, said strategist JPMorgan.

“The faster the pace of institutional adoption, the faster the trend in variability,” he said.

However, there are risks ahead for the current rally. While led by institutional investors, sales participation has also been high.

“The biggest danger is that the streaming trend we’ve seen over the last few months is slowing substantially out of here,” Panigirtzoglou said.

“Especially when the economies reopen, people go back to the office, they have less time to trade at home, and as a result, some retail outlets … Slows down from here, “he said.