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Bitcoin's Price Volatility May Hamper Its Progress Above $50K, JPMorgan Says
The bank's analysts pointed to gold's much lower volatility.
Updated Sep 14, 2021, 12:12 p.m. Published Feb 17, 2021, 2:13 p.m.
Bitcoin's price volatility needs to subside for the cryptocurrency to continue its stellar rally, according to analysts at investment banking giant JPMorgan.
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In a note on Tuesday reported by Reuters, the analysts drew attention to bitcoin's high volatility relative to gold, the classic inflation hedge, as an obstacle to significant gains beyond current levels around $51,000.
"Bitcoin's three-month realized volatility, or actual price moves, is 87% versus 16% for gold – an asset, proponents say it could threaten," the investment bank said.
While bitcoin is increasingly described as "digital gold," skeptics believe the cryptocurrency is too volatile to find wide acceptance in institutional portfolios. Even so, several publicly listed companies such as Tesla and MicroStrategy have diversified cash holdings into bitcoin over recent months.
Also read: Bitcoin Hits New High Above $51K, Shrugging Off Rising Bond Yields
While crypto traders suggest other prominent companies are likely to follow suit, JPMorgan also said recently that bitcoin's turbulent price action may keep corporates from emulating Tesla's move – a sentiment echoed by Wedbush Securities on Tuesday.
Bitcoin reached a new lifetime high of $51,735 early on Wednesday, taking the year-to-date gain to over 75%, according to CoinDesk 20 data.
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Bitcoin's massive underperformance to stocks in Q4 bodes well for January, says K33's Lunde
After an active morning Tuesday, bitcoin flattened out in afternoon trading around the $87,500 area, up 2% over the past 24 hours.
What to know:
- Bitcoin held in the $87,500 in U.S. afternoon action on Tuesday, up 2% over the past 24 hours.
- K33 analyst Vetle Lunde suggested BTC's relative weakness to stocks this quarter could mean rebalancing-led buying once January rolls around.
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