Goldman Sachs, JPMorgan Crypto Investing Analysis


  • Some of Wall Street’s highest-profile names have issued bullish long-term bitcoin price predictions this year.
  • Goldman Sachs said the cryptocurrency can hit $100,000 if it continues taking gold’s market share.
  • Insider breaks down what all the biggest banks have said about bitcoin in 2022.

Bitcoin‘s price surged last year, lifting it into the top 10 assets by total market capitalization – and meaning that it was too big for analysts at banks like Goldman Sachs, JPMorgan, and Bank of America to ignore.

Two of those Wall Street giants have set bullish long-term price targets for the $800 billion cryptocurrency. Goldman’s co-head of global FX and EM strategy Zach Pandl charted a path for bitcoin to eventually hit $100,000, while JPMorgan strategist Nikolaos Panigirtzoglou renewed the bank’s high-profile $146,000 target back in November.

Bank of America, meanwhile, launched its coverage of digital assets in an October 2021 report that argued the crypto space is now simply “too large to ignore.”

“Crypto-based digital assets could form an entirely new asset class,” strategist Alkesh Shah said. “It’s difficult to overstate how transformative blockchain technology, digital assets, and the thousands of decentralized apps that have yet to be created could be.”

But some financial institutions have retained a more bearish stance on bitcoin. Swiss bank UBS, which manages assets worth $2.6 trillion, sees cryptocurrencies as purely speculative, even after the launch of more sophisticated investing products like ProShares’ bitcoin ETF.

“We view direct exposure to crypto coins and tokens as suitable only for highly risk-tolerant investors,” a team led by the bank’s chief investment officer Mark Haefele said. “While we see potential for the technologies underpinning digital assets, we continue to view the coins themselves as speculative.”

Insider breaks down all the available bitcoin price predictions from some of Wall Street’s top analysts.

Bitcoin price outlook

Goldman Sachs strategists said that bitcoin could hit $100,000 if it continues to take gold’s market share as a ‘store of value’ asset. This refers to the idea that more investors will buy bitcoin as a hedge against inflation, although analysts note that bitcoin’s


volatility

would have to recede significantly to make it an attractive alternative.

“Bitcoin’s market share will most likely rise over time as a byproduct of broader adoption of digital assets, and possibly due to Bitcoin-specific scaling solutions,” Pandl wrote in a recent note. “If bitcoin’s share of the ‘store of value’ market were to rise to 50% over the next five years, its price would increase to just over $100,000.”

“Digital asset markets are much bigger than bitcoin, but we think that comparing its market capitalization to gold can help put parameters on plausible outcomes for bitcoin returns,” he added.

Pandl estimated bitcoin’s $700 billion market capitalization gave it a 20% share of the “store of value market”. Cryptocurrencies have bounced back since he wrote his note, meaning bitcoin’s


market cap

now sits just under $800 billion.

JPMorgan renewed its $146,000 long-term price target in November, arguing that investors increasingly see the crypto asset as a digital alternative to gold.

“The re-emergence of inflation concerns among investors during September/October 2021 appears to have renewed interest in the usage of bitcoin as an inflation hedge,” Panigirtzoglou said. “Considering how big the financial investment into gold is, any such crowding out of gold as an ‘alternative’ currency implies big upside for bitcoin over the long term.”

But JPMorgan’s customers doubt bitcoin will reach a new all-time high price this year. In a recent survey of 47 clients, 41% said they expect the digital asset to be priced at $60,000 by the end of the year, with just 5% predicting it will pass $100,000 in this time.

Citigroup analysts appear to have significantly overestimated investors’ interest in digital assets, with a leaked note from 2020 predicting that bitcoin would hit $318,000 by December 2021. The bank’s head of FX technicals Tom Fitzpatrick also called bitcoin “21st century gold”.

Morgan Stanley was the first Wall Street bank to offer its wealthier clients access to bitcoin, launching three funds in March 2021. Its total exposure to bitcoin is now $300 million, according to Cointelegraph.

Bank of America, RBC, and Wells Fargo all began covering cryptocurrencies as investable assets last year, but those banks are yet to release an official bitcoin price prediction.

“Cryptocurrencies, in our view, have now evolved into a valid consideration as a portfolio option for qualified investors,” Wells Fargo’s global investment strategy team wrote in a research note. “Low five- and 10-year correlations with traditional asset class returns hint that the long-term determinants of cryptocurrency prices differ from those of traditional investment assets.”

“In this way, cryptocurrencies are potential portfolio diversifiers, which we believe adds to [their] stability and viability,” the team added.



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