Bitcoin Targets $45,000 on the Link to Gold

The US Personal Consumption Expenditures (PCE) data showed its first rise since October 2022 on Friday. The US Fed’s preferred inflation gauge, such a reading should present a headwind for risk assets, including crypto, as it implies that inflation remains persistent and that more financial tightening may be required to tame it.

As a result of Friday’s report, Fed funds futures are now pricing in a 64.2% probability of an additional rate hike at the 14 June meeting. This could lead to runaway inflation, which would challenge the markets. Bitcoin and gold could provide a solution to this problem.

Institutional investors own roughly $3 trillion worth of gold, which could be good news for BTC. If bitcoin starts resembling more the price performance as well as the investment structure of gold, its price could skyrocket to $45,000, according to a note by JPMorgan’s analysts.

However, the multinational investment bank believes there’s a big catch. Bitcoin’s YTD performance has been rather impressive, as the asset entered 2023 at under $17,000 following a turbulent 2022. However, it broke above that level in the first few weeks of the new year and skyrocketed to above $30,000 in the following months.

Despite its subsequent retracement to its current level of around $27,000, BTC still trades 60% higher now than it did at the start of 2023. JPMorgan’s analysts believe the cryptocurrency could go up by another 75% soon. To do so, though, bitcoin needs to be accepted as a similar investment tool as gold, which many maxis have argued for in the past several years.

“Investors are currently holding gold for investment purposes outside of central banks to the tune of around $3 trillion, which, if paralleled with Bitcoin, presents a $45,000 price. This projection is based on the assumption that Bitcoin’s value will match that of gold in private investors’ portfolios, in terms of risk capital or volume,” – reads the note.

In order for bitcoin to reach $45,000, it would need to attract a significant amount of new investment capital. This could happen if bitcoin is seen as a safe haven asset in times of high inflation. However, it is also possible that bitcoin could continue to be volatile and its price could fall back down. Only time will tell if bitcoin can reach $45,000 and become a store of value like gold.