Goldman Sachs Joins List of Early Bitcoin Predictions With $100K Bet

A few things in life are guaranteed - death, taxes, and predictions on start-of-year cryptocurrency prices.

Goldman Sachs Joins List of Early Bitcoin Predictions With $100K Bet

Several parties are already sharing what they think Bitcoin will trade at by years' end. It is a tradition that dates back to Bitcoin's break into the limelight.

Goldman is All-In on $100,000

The first notable institution to share its Bitcoin prediction is Goldman Sachs. On January 4, the banking giant said data analysts had predicted a $100,000 price peg for Bitcoin at the end of the year.

Goldman said analysts examined a critical factor in arriving at this price peg; Bitcoin's use as a store of value, especially compared to gold.

Goldman concluded Bitcoin indeed has some use as a store of value, adding that, when comparing Bitcoin's market cap to gold's, they see a massive upside.

Watch Your Back, Gold

Goldman's analysts primarily noted Bitcoin is gaining a share of the store of value market. The asset, which held a negligible share of the market as recently as 2020, managed to gobble up 20 percent. If the impressive growth rate continues at a steady pace, a $100,000 peg for Bitcoin becomes even more plausible.

Many see Bitcoin replacing gold as the world's most trusted store of value. Back in October, Bloomberg reported - quoting a report from JPMorgan's analysts - that an increase in inflation had driven more people to Bitcoin than gold. That month alone, Bitcoin's price rose by an impressive 40.6 percent.

Zach Pandl, Goldman Sachs' Head of Global Foreign Exchange, Rates, and Emerging Market Strategy, said:

"We think that comparing its market capitalization to gold can help put parameters on plausible outcomes for Bitcoin returns."

JPMorgan is More Moderate In Its Call

While Goldman Sachs is eyeing a possible $100,000 price peg by the end of the year, the people over at JPMorgan aren't so optimistic.

Earlier this year, the investment banking giant reported that most of its clients believe Bitcoin will only hit $60,000 by the end of the year.

According to reports, JPMorgan's analysts surveyed 47 clients between December 13 to January 7 as part of the company's efforts to develop an economic outlook for the year.

About 41 percent of respondents claimed they believe Bitcoin's price will close out the year at around $60,000. Only 5 percent believe that the asset will hit $100,000 by December 31.

The estimate from JPMorgan suggests Bitcoin will spend most of the year correcting and struggling to make gains. A $60,000 peg isn't far from the asset's all-time high of $69,500.

JPMorgan believes Bitcoin could still cross the $100,000 mark in the long run. In November, the company said that a long-run fair estimate for Bitcoin is in the $146,000 to $150,000 range.

But for the asset to hit these numbers, it will need to lower volatility. A drop in volatility will boost Bitcoin's attractiveness to institutions, pushing its price up.

"Bitcoin's allure as an inflation hedge has perhaps been strengthened by the failure of gold to respond in recent weeks to heightened concerns over inflation… considering how big the financial investment into gold is, any such crowding out of gold as an 'alternative' currency implies big upside for bitcoin over the long term," the report highlighted.

Bitcoin is four or five times more volatile than gold, according to JPMorgan. For institutional investors to join the market at the pace needed to push Bitcoin's price, it will have to decrease volatility.

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