BTC News: JP Morgan Still Believes Bitcoin Is Cheap Next To Gold

JPMorgan analysts say Bitcoin could reach $170K within a year and argue that it’s undervalued compared to gold amid market corrections.

Bitcoin could soon climb far higher than its current level, according to a new analysis from JPMorgan. 

The investment bank believes the cryptocurrency’s fair value stands around $170,000, based on a comparison with gold. The report says that Bitcoin is undervalued and may have plenty of room to grow in the months ahead.

JPMorgan’s Gold-Based Model for Bitcoin

The prediction comes from Nikolaos Panigirtzoglou and his team of strategists at JPMorgan. 

They argue that Bitcoin should trade closer to gold when adjusted for risk. Their model assumes that Bitcoin requires roughly 1.8 times more risk capital than gold. Considering the $6.2 trillion invested in gold through ETFs, bars and coins, Bitcoin’s market cap would need to expand by about two-thirds to reach the same scale.

At Bitcoin’s current price near $102,000 and a market cap of about $2.1 trillion, JPMorgan estimates the cryptocurrency is trading roughly $68,000 below its fair value. 

If it matched two-thirds of gold’s private investment base, the price would need to reach about $170,000.

The bank’s note described the analysis as a mechanical valuation rather than a sentiment-driven projection. It focuses on risk capital, liquidity and investor allocation patterns instead of speculation or hype.

Bitcoin’s Volatility and the End of Deleveraging

JPMorgan’s optimism comes amid what analysts describe as a healthy correction in the crypto market. The bank said the worst of the recent deleveraging is behind Bitcoin.

In October, the cryptocurrency fell more than 20 percent from a high near $126,000 after a wave of forced liquidations in perpetual futures markets. 

The downturn was worsened by a $128 million exploit on the DeFi platform Balancer, which shook investor confidence.

According to Panigirtzoglou, the ratio of open interest in perpetual futures to Bitcoin’s market cap has now returned to normal levels. This indicates that the excess leverage that caused the earlier volatility has mostly been cleared.

Bitcoin Compared to Gold

For years, BTC has been called “digital gold.” JPMorgan’s outlook reinforces that view but shows that the cryptocurrency is currently undervalued relative to gold.

Gold’s recent price surge, which is trading above $4,000 per ounce has come with higher volatility. Meanwhile, Bitcoin’s volatility has eased after the October correction. When adjusted for this difference, Bitcoin now appears cheaper on a risk-adjusted basis.

The bank believes that if current trends hold, Bitcoin could serve as an increasingly attractive hedge against equity risk (especially as gold’s price becomes more unstable).

Meanwhile, retail investors continue to buy both gold and US stocks. However, the analysts say that Bitcoin is taking on a larger role as an alternative asset for those seeking diversification.

The General Market Context

October marked Bitcoin’s first losing month since 2018. Despite a year-to-date gain, the 4 to 5 per cent monthly drop was among its sharpest October declines on record.

JPMorgan’s report says that such corrections are part of a natural market cycle. 

The analysts do not expect the tightening of US banking reserves to weigh heavily on digital assets. Liquidity across the general financial system continues to be healthy and is supporting risk assets like equities and cryptocurrencies.

Bitcoin’s recovery since early November supports that prediction. The asset has stabilised above $100,000 and is showing confidence from both retail and institutional investors.

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