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VISTORBELITUNG.COM,NEW YORK, JPMorgan Chase & Co., the largest bank in the U.S. with $3.6 trillion in assets, has delivered a powerful endorsement of Bitcoin (BTC), stating in its latest research report that the cryptocurrency is undervalued when compared to gold on a volatility-adjusted basis.
The firm's analysts, led by Managing Director Nikolaos Panigirtzoglou, have now set a new theoretical price target of $165,000 for Bitcoin, signaling a significant upside potential from its current trading levels.
The core of JPMorgan's bullish assessment is a mechanical comparison of Bitcoin and gold's risk profiles. The report highlights that the Bitcoin-to-gold volatility ratio has dropped below 2.0, reaching its lowest level in years.
This dramatic shift means that Bitcoin now requires only about 1.85 times the risk capital of gold, making it a much more palatable asset for institutional investors than in previous cycles.
"The steep rise in the gold price over the past month has made Bitcoin more attractive to investors relative to gold, especially as the Bitcoin-to-gold volatility ratio keeps drifting lower," the analysts wrote.
A Path to $165,000
JPMorgan's calculation is based on an alignment of Bitcoin's market capitalization with the value of private investment allocated to gold.
Current Market Cap: Bitcoin's market cap sits at approximately $2.3 trillion.
Gold Benchmark: Private investment in gold (including ETFs, bars, and coins) is estimated at around $6 trillion.
The analysts conclude that for Bitcoin's market cap to align with this $6 trillion gold benchmark, when adjusted for the lower relative risk (volatility), it would need to increase by approximately 42%. This "mechanical exercise" thus implies a theoretical price of $165,000 for one Bitcoin.
Interestingly, the report notes a drastic valuation swing: at the end of last year, Bitcoin was considered $36,000 overvalued versus volatility-adjusted gold. Today, that gap has flipped, with the bank estimating it is undervalued by around $46,000.
JPMorgan attributes the current market dynamics to a growing phenomenon dubbed the "debasement trade" a flight of capital towards scarce, alternative stores of value like gold and Bitcoin amid global concerns over inflation and fiscal deficits.
The firm pointed to strong inflows into both gold and spot Bitcoin Exchange-Traded Funds (ETFs), particularly from retail investors who are increasingly recognizing Bitcoin's role as a form of "digital gold."
While JPMorgan’s CEO, Jamie Dimon, has been a long-standing critic of cryptocurrencies, the bank's latest research reinforces the growing consensus among Wall Street strategists that Bitcoin has become a legitimate long-term portfolio hedge.
This news comes as the Bitcoin price climbs back above the $120,000 mark, signaling a potential breakout toward its previous all-time high.