JPMorgan Analysts Projects a $45,000 Gold-Based Bitcoin Price

Since the beginning of the year, the leading cryptocurrency Bitcoin (BTC) price has made a tremendous recovery from the bear market of 2022.

As of November 2022, the BTC price was around $15,000 but by April 2023, the price had doubled to close to $30,000. The price rally spread across other cryptocurrencies including Ethereum (ETH). However, the recovery was short-lived as the coin has seen a slight recline in price in the past few weeks.

 In recent times, there have been regulatory concerns in the United States that contributed to the collapse of crypto-friendly financial institutions like Signature Bank and Silvergate Bank. This has also impacted the prices of Bitcoin and other digital assets. 

Looking at the brighter side, strategists at Wall Street giant JPMorgan Chase & Co led by Nikolaos Panigirtzoglou have predicted a bull case scenario for BTC but this imminent growth is hinged on the potential surge in the price of gold. These strategists are confident that Bitcoin could reach $45,000 if it is compared to Gold in private investors’ portfolios in risk capital or [volume]-adjusted terms. 

At present, the price of Gold is almost $2,000 per ounce and it has been seen over time that both assets move in tandem. They are also regarded as alternative assets for investors who are looking to expand their financial portfolios. 

“With the gold price rising above $2,000, the value of gold held for investment purposes outside central banks is currently valued at around [$3 trillion]. In turn, this implies a $45,000 price for bitcoin under the assumption that bitcoin equalizes gold in private investors’ portfolios in risk capital or [volume]-adjusted terms,” the JPMorgan strategists’ report reads.

Bitcoin Halving Likely to Affect Production Cost

The analysts consider this $45,000 rally is considered an upper limit for the token. 

Markedly, this is an indication of limited potential for the digital asset beyond the increase driven by the doubling of mining or production cost. With the coming of Bitcoin halving in April or May 2024 (this event happens every four years), there are assumptions that the production cost of BTC would reach $40,000.

“Indeed, the previous halving events of 2016 and 2020 were accompanied by a bullish trajectory for bitcoin prices that had accelerated post the halving event,” the analysts reiterated.