In a market liquidity report released yesterday by a team of analysts led by Nikolaos Panigirtzoglou at JPMorgan, it was pointed out that considering Bitcoin as digital gold, the most similar asset to it is naturally gold. The JPMorgan analysts stated that when comparing the “nominal value” of these two assets, the total value of Bitcoin has reached $1.3 trillion, while gold used for investment purposes is $3.3 trillion, meaning that gold still has a higher proportion in investment portfolios compared to Bitcoin.
Theoretically, if the value of Bitcoin in investors’ portfolios is to be on par with gold, it would mean that its value still has a potential increase of 153%. However, JPMorgan added that this calculation overlooks an important factor, which is “risk.”
The analysts mentioned that most investors consider risk and volatility when allocating across asset classes. Given that the volatility of Bitcoin is about 3.7 times that of gold, their conclusion is that “expecting the nominal amount of Bitcoin in investors’ portfolios to match gold is unrealistic.” In other words, if cryptocurrencies are indeed seen as a digital substitute for gold, investors would take into account its volatility and assign it a smaller share in their portfolios.
The analysts believe that if Bitcoin is truly viewed as a safe-haven asset like gold, the implied allocation would be reduced to $0.9 trillion ($3.3 trillion divided by 3.7), and the total value of Bitcoin would not exceed $900 billion.
Therefore, from the perspective of volatility adjustment, the position of Bitcoin in investors’ portfolios is already larger than that of gold. This indicates that Bitcoin investors are not buying it for “hedging or gold-like considerations” but for different reasons.
Bitcoin Surge Could Lead to Fed Delaying Rate Cut Plans
In addition to discussing the value between Bitcoin and gold, JPMorgan’s analysts also noted in the report that Bitcoin’s record-breaking surge could lead to the Federal Reserve delaying its rate cut plans by the end of this year.
JPMorgan strategist Marko Kolanovic stated in a recent report that Bitcoin rising above $60,000, along with the stock market reaching historical highs, indicates the accumulation of a “bubble” in risk assets, which could ultimately prompt the Federal Reserve to delay its planned rate cuts. Marko Kolanovic stated:
