• Bitcoin could stage a monster rally in 2021 and reach $100,000, but pricing at that level "would prove unsustainable," JPMorgan said in a note on Monday.
• "We believe that the valuation and position backdrop has become a lot more challenging for bitcoin at the beginning of the New Year," JPMorgan said.
• At its market cap of $575 billion, bitcoin would have to surge to $146,000 to match the total private-sector investment in gold via exchange-traded funds or bars and coins, the note said.
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Bitcoin's 300% surge in 2020 could repeat this year, but such a move higher would be unsustainable, JPMorgan said in a note on Monday.

"While we cannot exclude the possibility that the current speculative mania will propagate further, pushing the bitcoin price up towards the consensus region of between $50k - $100k, we believe that such price levels would prove unsustainable," the note said.

Bitcoin surged to nearly $35,000 on Sunday before plunging as much as 17% on Monday, its steepest drop since March.

JPMorgan still sees bitcoin competing against gold as an "alternative" currency, with millennial investors preferring the "digital gold" over traditional gold and driving demand for the cryptocurrency.

With a market value of $575 billion, bitcoin would have to surge to $146,000 to match the total private-sector investment in gold via exchange-traded funds or bars and coins, the note said.

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But that long-term upside target based on bitcoin becoming as valuable as the gold market is predicated on institutions becoming comfortable with the volatility associated with the crypto asset as it occupies a place in their portfolios. For risk-management purposes, a less volatile bitcoin would likely lead to increased adoption among institutions.

"It is thus unrealistic to expect that the allocations to bitcoin by institutional investors will match those of gold without a convergence in volatilities. A convergence in volatilities between bitcoin and gold is unlikely to happen quickly and is in our mind a multi-year process," JPMorgan said.

"We believe that the valuation and position backdrop has become a lot more challenging for bitcoin at the beginning of the New Year," it added.

Another analyst who sees bitcoin hitting $100,000 is Fundstrat's Tom Lee, who said last week that the crypto asset could quadruple in 2021 as it experiences a similar parabolic rally as in 2017.

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