Bitcoin (BTC) Fair Value Is $170K, JPMorgan Argues in Gold-Based Model

Bitcoin has been a hot topic in the financial world, and a recent analysis from JPMorgan Chase has stirred renewed interest. The bank's analysts have projected that Bitcoin could reach a price of $170,000 within the next six to twelve months. This forecast is based on a model that compares Bitcoin's market position to that of gold, suggesting that Bitcoin is currently undervalued.

JPMorgan Forecasts Bitcoin Price Could Rise to $170,000 in Coming Months

According to JPMorgan, Bitcoin is poised for significant growth, with the potential to rise from its current price of around $102,000 to as high as $170,000. This outlook comes at a time when the cryptocurrency market has seen a stabilization after a period of volatility. Analysts, including strategist Nikolaos Panigirtzoglou, believe that the recent downturn in crypto derivatives, particularly Bitcoin perpetual futures, has cleared the way for a more positive trajectory.

Market Stabilization Following Deleveraging in Crypto Derivatives

Recent market activities have shown signs of stabilization, particularly after a series of selloffs in October and November. According to the analysts, the deleveraging process in perpetual futures appears to be behind us, which is a positive indicator for future price movements. The report noted that this stabilization could set the stage for a renewed upswing in Bitcoin's price, suggesting that the worst might be over for investors.

Bitcoin's Fair Value Compared to Gold's Investment Base

JPMorgan’s model draws a compelling comparison between Bitcoin and gold, a traditional store of value. The analysis posits that Bitcoin consumes 1.8 times more risk capital than gold. Given that the private investment in gold amounts to approximately $6.2 trillion, Bitcoin's market cap would need to increase significantly to align with gold's investment exposure. This adjustment implies a fair value of $170,000 for Bitcoin, highlighting that it is currently trading well below its potential.

Shifts in Investor Behavior and Broader Market Outlook

The timing of this forecast coincides with notable shifts in investor behavior across various asset classes. While retail investors continue to show interest in U.S. equities and gold, Bitcoin is emerging as an attractive alternative for those seeking to hedge against equity risks. The report also observes a rise in gold purchases by central banks, yet Bitcoin could offer a more appealing risk-adjusted investment in the current climate. Despite concerns over tightening U.S. banking reserves, JPMorgan remains optimistic about liquidity in broader markets, suggesting that risk assets like Bitcoin could thrive.