- 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 responded by setting bullish long-term price targets for the $700 billion cryptocurrency. Goldman’s co-head of global foreign exchange 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.”
Bitcoin is down 19% so far this year, falling below the $40,000 price level and adding to fears about a ‘crypto winter’.
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
would have to fall 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
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. But the bank slashed that price target to just $38,000 in January, arguing that the token’s volatility will hinder long-term institutional adoption.
“Our previous projection that the bitcoin to gold volatility ratio will fall to around 2x later this year seems unrealistic. Our fair value for bitcoin based on a volatility ratio of bitcoin to gold of around 4x would be 1/4th of $150,000, or $38,000,” the bank said.
JPMorgan’s customers also 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.