- A report by JP Morgan said that Bitcoin prices could jump to $45k.
- The analyst cited its correlation with gold, which has been rising.
- Bitcoin will go through halving in 2024, which is another catalyst.
Cryptocurrency prices have lost their bullish momentum as concerns about the debt ceiling issue coincides with the historically weak performance towards the summer season. Bitcoin is sitting pretty below $27,000 while Ethereum has slipped to $1,800. Other popular cryptocurrencies like Litecoin, Cardano, and Zilliqa have also retreated.
JP Morgan believes that Bitcoin price could hit $45k
Bitcoin and other cryptocurrencies have plunged because of the ongoing macro factors in the United States. As I wrote here, there are lingering concerns that the US will default on its obligations as Republicans and Democrats differ on the debt ceiling issue.
A default would be catastrophic for most financial assets because of its unprecedented nature. I believe that assets like cryptocurrencies and stocks would all crash hard. As such, these implications mean that the two sides will work hard to reach a debt ceiling agreement soon.
In fact, media reports by the Wall Street Journal and the Financial Times show that the two sides are about to reach a deal. If this is correct, a deal will likely be passed during the weekend or on Monday, thus ensuring that the American government is funded.
Meanwhile, a JP Morgan analyst believes that Bitcoin price could surge to $45,000 in the coming months. The analyst cited two main reasons for this. First, he cited the fact that Bitcoin is seen by some investors as an alternative to gold.
They see the two as stores of value and inflation hedges. As such, with gold price trading at $2,000, the analyst believes that Bitcoin should be trading at $45,000, which is about 70% from the current level.
The second thing that could push Bitcoin price to $45k and above is the upcoming halving that is scheduled for 2024. Halving typically reduces the rewards that miners get by half. In the past, Bitcoin has jumped towards halving.
Further, there are signs that the Federal Reserve will start pausing its rate hikes soon. Again, since BTC dropped during the rate hikes, we could see its price jump when the Fed starts pivoting.
The $300 billion implication
Bitcoin has a market cap of $512 billion. Therefore, if it rises to $45,000, it means that its total market cap will jump to over $812 billion. This means that it could rise by over $300 billion during that time.
If this view is correct, then, we will likely see other altcoins like Zilliqa, Cardano, Litecoin, and Render token. Historically, these cryptocurrencies have always had a close correlation. Therefore, if BTC jumps by 70%, this means that these coins will do much better than that.
Litecoin, in particular, has an important catalyst ahead. The network will go through halving in August, meaning that the coin will likely do well by then.
However, JP Morgan analysts said that the potential risks are the ongoing regulatory scrutiny and the challenges in the banking sector.
“The headwinds from the U.S. regulatory crackdown, the unsettling of banking networks for the crypto ecosystem and the reverberations from last year’s FTX collapse are likely to constrain any potential upside.”
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