In a new note, JPMorgan analysts argue that Bitcoin looks cheap relative to gold — and that it could reach around $170,000 in the next six to twelve months.
Here’s what you need to know:
- Based on their “volatility-adjusted” model, Bitcoin’s current market cap would need a ~67 % increase to match a portion of gold’s private investment base.
- The analysts highlight that the ratio of open interest in Bitcoin perpetual futures to Bitcoin’s market cap has returned to average levels, signalling that the prior deleveraging phase may be over.
- They estimate that Bitcoin today carries about 1.8 times the “risk capital” of gold (i.e., it consumes 1.8 times more risk capital than gold) and thus should trade at higher price to reflect that.
Why JPMorgan Believes Bitcoin Has Significant Upside
1. Deleveraging in derivatives markets is largely complete
The bank’s strategist Nikolaos Panigirtzoglou noted that the ratio of open interest in perpetual futures to Bitcoin’s market cap dropped to levels comparable to early 2024, signalling that the heavy liquidation phase might be behind us.
2. Gold’s volatility has surged
With gold rallies pushing volatility higher, Bitcoin’s “risk-adjusted value” looks more favourable. JPMorgan uses this dynamic to argue that Bitcoin looks “cheaper” in this relative sense.
3. Comparison to gold’s weight in private investment
Gold is estimated to have ~US$6.2 trillion in private sector investment (ETFs + physical). With Bitcoin at a market cap of around US$2.1 trillion, matching even part of gold’s investor base on a risk-adjusted basis would imply a big upside.
4. Relative undervaluation vs. last year
According to JPMorgan, at the end of last year Bitcoin arguably traded US$36,000 too high compared to gold; now it is US$68,000 too low according to their model.
5. Six to twelve month horizon
Their model points to the next 6–12 months as the window where much of this upside might materialise. They believe current conditions (lower leverage, settled derivatives, rising gold volatility) support this.
What This Means for Investors & Markets
- If Bitcoin really does reach ~US$170,000, that’s roughly a 67% gain from current levels (currently around US$102,000) CoinDesk
- The “Bitcoin looks cheap” claim is relative: it doesn’t mean there aren’t risks — macro, regulatory, or crypto-specific.
- For investors considering Bitcoin vs gold: this analysis signals that on a volatility-adjusted, risk-capital basis, Bitcoin may offer stronger upside currently.
- But the move to US$170K is not guaranteed — the model depends on assumptions (volatility, investor flows, matching gold’s investor base) which may change.
- For India and other emerging markets: if global institutional flows pivot more toward digital assets like Bitcoin, local interest and adoption may rise accordingly.
Background: Why This Comparison with Gold Matters
- Bitcoin has often been coined “digital gold” because of its limited supply (21 million coins), store-of-value narrative, and role in alternative asset portfolios.
- Gold, long established as a safe-haven and store-of-value asset, has a massive private investment base and global recognition.
- By comparing Bitcoin to gold on a risk-adjusted basis, JPMorgan is effectively assessing whether Bitcoin has grown into a similar role (or could) in investor portfolios.
- With Bitcoin’s market cap now in the trillions and significant institutional infrastructure (ETFs, futures, custodians) built, many analysts see the transition from “niche crypto” to “mainstream risk asset” underway.
Risks & Considerations
Even though the headline is bullish, several caveats apply:
- Model assumptions: The fair-value model rests on comparing risk capital and investment bases. If gold’s investment grows faster, or if Bitcoin remains more volatile than assumed, the fair value may shift.
- Macro and regulatory environment: Digital assets remain exposed to regulatory changes, fiscal-monetary policy shifts, and technological risks (security breaches, forks, etc.).
- Execution risk: Even if Bitcoin is undervalued relative to gold, it still needs investor flows and market confidence to realise that upside.
- Overhanging downside: Just as Bitcoin has upside, it also carries higher risk — the model implies drawback if things go wrong.
Summary
JPMorgan’s analysis gives a strong bullish signal: Bitcoin looks cheap relative to gold when adjusted for volatility and risk-capital consumption. Their framework suggests a fair-value target near US$170,000 in the next 6-12 months. However, this projection is based on specific assumptions and should not be taken as a guarantee. For investors, the comparison to gold helps frame Bitcoin’s evolving role, but the usual cautions of investing in digital assets still apply.
