In a world awash with fiscal stimulus and higher inflation targets, investors are seeking a safe haven. As a result, gold (GLD  ) was the best performing asset class of 2020. But analysts at JP Morgan (JPM  ) claim that gold could be losing some of its luster as the precious metal market heats up. They suggest that Bitcoin, gold's polar opposite, could be the next big safe-haven asset. As a result, these same analysts expect the value of Bitcoin to shoot up to $146,000 over the next few years as it begins to compete with gold, according to CNBC.

But how can such a volatile, speculative, and immaterial asset like Bitcoin compete with something as solid as sure as gold? Well, a lot needs to change, according to JP Morgan.

The Road to $146,000 Bitcoin

According to JP's analysts, two things are needed for Bitcoin to reach $146,000: reduced volatility and increased institutional investment. JP's analysts claim the Bitcoins market cap needs to expand as much as 4.6 times for the cryptocurrency to match the nearly $2.7 trillion currently invested in gold. But for this expansion to happen, the fundamental nature of Bitcoin needs to change.

As anyone invested in the crypto space knows, the value of Bitcoin has as much stability as a hormonal teenager. Just a day before JP Morgan published its analysis, the value of Bitcoin fell by 17%, only to reach a new high just a few days later. Bitcoin's turbulence primarily comes down to punting and speculation by retail investors. So, for Bitcoin to reach $146,000, it needs to attract a new type of investor, namely institutional investors. That's because institutional investors typically don't engage in the sort of day trading that makes Bitcoin such a frothy asset. But it's a catch 22 for Bitcoin to stabilize, it needs more institutional investment, and ironically, it's Bitcoin's instability that scares off these same institutional investors needed to stabilize it.

The Grayscale Fund and the Future of Bitcoin

However, times are changing. Big names on Wall Street like Paul Tudor Jones and Stanley Druckenmiller have bought into Bitcoin. Even Massachusetts Mutual Life Insurance company has bought about $100 million in Bitcoin. And it's worth noting that life insurance companies are notoriously conservative when it comes to investment.

Much of this institutional inflow comes down to the Grayscale Fund (GBTC  ). Rather than buying Bitcoin directly, big-time investors are buying into this particular exchange-traded fund, which has consistently achieved inflows of up to a billion dollars per month. The same analysts at JP Morgan note that these inflows "are too big to allow any position unwinding by momentum traders to create sustained negative price dynamics," quoted by CNBC.

In other words, the fund offers a more stable way for institutional investors to buy into Bitcoin. And the more Bitcoin institutional investors own, the more stable Bitcoin's value becomes. But is this increased institutional investment decreased volatility cycle sustainable?

A Middle of the Road Perspective

2020's institutional inflows into Bitcoin have prompted Bitcoin bulls to claim that the current rally is fundamentally different from the 2017 bubble. During that year, the value of Bitcoin fell as much as 500%. But Bitcoin bears put up the same argument they've always had; that Bitcoin is, and always will be, a speculative asset whose price is built mainly on hype rather than real value.

JP Morgan's analysts say that the truth lies somewhere in the middle of these two extremes. The analysts agree with the bears that the current run-up has put Bitcoin into "more challenging territory." Nor are JPM's price targets based around the recent hype. They see Bitcoins run-up to $146,000 as a multi-year prospect. Furthermore, they warn investors that if Bitcoin breaches the $50,000 mark sometime this year that the currency may be in "unsustainable territory."

Bitcoin is fast approaching this unsustainable territory. On Monday, Bitcoin's value fell from its Jan. 8 high of $42,000 and is standing at about $33,800 on Tuesday. This price run-up begs the question, will Bitcoin's price in 2021 come down to investor's fear of missing out? Or will mainstream investors believe that Bitcoin in 2021 actually has real value?