A lot of investors are paying close attention to Bitcoin as it enters uncharted terrain.
The possibility of interest rate increases is a situation that digital currencies have yet to witness. However, it is becoming more plausible after the year-over-year US consumer price index increased by a whopping 7.5 percent last night.
Today, the Reserve Bank of Australia (RBA) confirmed the shockingly high number. Philip Lowe, the current Governor of the RBA, replied by acknowledging that an interest rate hikes this year could be potentially ‘possible.’ In spite of this evidence, the latest JPMorgan analysis reports imply that Bitcoin may still have a road to new all-time highs.
So, what’s next for Bitcoin (BTC)?
Bitcoin’s Ups & Downs
Bitcoin’s price has risen about 17 percent in the last week, regaining some of the territory lost from November to January. But even so, according to a recent analysis by Nikolaos Panigirtzoglou, a research analyst at JPMorgan, there may be a further decline in the near term.
As per the analysis, Bitcoin should be reasonably at roughly $38,000. Surprisingly, Panigirtzoglou draws his argument on a study of the relation of volatility to gold.
Panigirtzoglou emphasizes that Bitcoin’s target value is $38,000 since it is four times more unpredictable than gold. Furthermore, if the digital currency is capable of achieving volatility parity with gold, its market price would be US$150,000.
As a result, Panigirtzoglou set a long-term price prediction of $150,000 for Bitcoin. However, this would be contingent on it acquiring wider adoption – a result that would probably lessen volatility.
Other Investments Correlation
Cryptocurrency supporters have long argued that digital currencies, specifically Bitcoin, are a statistically independent asset class. This indicates that its performance practically detaches to other assets such as stocks, real estate, and so on.
However, lately, the leading digital currency’s behavior has begun to mimic those of tech stocks. In March 2021, Bitcoin went contrary to the S&P/ASX All Technology Index. However, in November of last year, the two asset classes began to move more in sync.
Despite this, some cryptocurrency analysts claim the association will be short-lived. Greg Foss, a Bitcoin strategist with Validus Power Corp, believes the similarities in performance will fade with time. According to Foss, Bitcoin will someday be considered as insurance and, as a result, will de-correlate from the other types of assets.
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