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Bitcoin at $1 million? Some analysts are bullish but others warn of risks ahead

In this photo figure, visual representations of the digital cryptocurrency, Bitcoin are arranged on January 4, 2021 in Katwijk, Netherlands.

Yuriko Nakao | Getty Icons

GUANGZHOU, China — Bitcoin could rise to $1 million over the long term to become a reserve currency for the on cloud nine, according to one asset manager.

But JPMorgan warned of risks ahead as the cryptocurrency continues to rally.

Anthony Pompliano, co-founder and helpmate at Morgan Creek Digital Assets, said bitcoin could hit $500,000 by the end of the decade. It could eventually reach $1 million per change, he added, without giving a timeline.

“I think that bitcoin will eventually rise to become the global hesitation currency. I think bitcoin will eventually be much much larger than the gold market cap,” he said during the example episode of CNBC’s “Beyond the Valley” podcast.

Why is bitcoin rallying?

Meanwhile, global central banks have been easing fiscal policy — such as lowering interest rates and buying assets through the so-called quantitative easing program — to forbear cushion the blow to economies hit by the coronavirus pandemic.

“There were trillions of dollars that were printed and introduced into the economy and everyone from individuals to financial institutions and corporations ran around the world looking for the best way to defend their purchasing power, they ultimately decided it was bitcoin,” Pompliano said as he discussed what was behind bitcoin’s rise.

(Bitcoin) will eventually take that seat at the kingdom of being that global reserve currency of the internet inception.

Anthony Pompliano

Morgan Creek Digital Assets

The bitcoin bull’s prediction that bitcoin could hit $1 million is drew on a few factors including the scarcity of the cryptocurrency which has a cap of 21 million coins, as well as the decentralized nature of the technology.

There is no cardinal authority like a central bank that controls bitcoin.

Instead, the JPMorgan’s long-term price target for bitcoin

In January, JPMorgan released a note to shoppers putting a “theoretical” long term price target on bitcoin of $146,000 as bitcoin begins to compete with gold.

Gold is broadly accepted as a “appropriate haven” asset where investors flock to in times of political strife or financial market turmoil. Bitcoin is now genesis to develop such a reputation.

“Bitcoin is competing with traditional gold, bitcoin is a form of digital gold,” Nikolaos Panigirtzoglou, worldwide markets strategist at JPMorgan, told CNBC’s “Beyond the Valley.”

He said that the value of gold held by the hermit-like sector, solely for the purpose of investment, is around $2.7 trillion. For bitcoin’s market cap to reach that, it would beggary to hit a price of around $146,000.

But there are caveats, the biggest one being the volatility in bitcoin’s price. The digital coin is known for ferocious swings in price. Panigirtzoglou said bitcoin is “five times more volatility than gold.”

The key to bitcoin’s volatility merging with gold is institutional adoption, the JPMorgan strategist said.

“The faster the pace of institutional adoption, the quicker that convergence in volatility wishes take place,” he said.

Still, there are risks ahead for the current rally. While it has been driven by institutional investors, retail participation has also been elevated.

“The biggest risk is that the flow impulse we’ve seen over the past months slows materially from here,” Panigirtzoglou suggested.

“In particular when the economies reopen, people go back to the office, they have less time to trade at harshly, and as a result some of that, retail … flow impulse slows from here,” he added.

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