J.P. Morgan, the largest commercial bank in the United States, released a new report on Thursday stating that considering volatility, the weight of Bitcoin in investors’ portfolios has surpassed that of gold.
According to reports from The Block and DL News, analysts from J.P. Morgan pointed out in the report that the total market value of Bitcoin is currently around $1.3 trillion, while the value of gold used for investment purposes is about $3.3 trillion, resulting in a gap of 153%. Based on this perspective, theoretically, the value of Bitcoin could increase by 153% to match the level of gold.
However, analysts stated that this calculation overlooks an important factor, which is risk and volatility. In other words, if cryptocurrencies were truly considered similar assets to gold, investors would take into account their volatility and allocate a smaller portion to them in their portfolios.
Considering volatility, Bitcoin’s allocation in investment portfolios has “surpassed gold”. Nevertheless, the report claims that if volatility is taken into account, Bitcoin has already “surpassed gold” in investors’ portfolios.
The analysts explained that, adjusted for Bitcoin’s volatility, assuming Bitcoin is equivalent to gold in terms of risk capital (funds designated for investment activities), the total market value of Bitcoin would shrink to $90 billion (dividing $3.3 trillion by 37), and the price of Bitcoin should be $45,000, far lower than the current price level of $67,137.
This also means that investors’ decision to invest in Bitcoin may not be based on considerations of it being a similar asset to gold, but for different reasons.
In addition, the J.P. Morgan analysts mentioned in the report that out of the total $3.3 trillion worth of gold used for investment purposes, only 7% (approximately $230 billion) is held in the form of funds, while the rest is held in the form of gold bars and coins.
However, the analysts also stated that considering the total outflow of $10 billion from GBTC and the net inflow of $9 billion into Bitcoin spot ETFs, it is suspected that the implied net inflow of Bitcoin spot ETFs might be due to a continuous transfer from existing tools and platforms, rather than representing new funds entering the cryptocurrency field.
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