J.P. Morgan’s strategists now believe that Bitcoin is substantially undervalued compared with gold when adjusted for risk and volatility. They estimate Bitcoin’s fair price at around $170,000, implying an upside of more than 60% from current levels.
Their conclusion is based on a key metric: the volatility ratio between Bitcoin and gold has fallen to approximately 1.8×, meaning Bitcoin now requires 1.8 times more risk capital than gold to deliver similar returns. With Bitcoin’s market cap around $2.1 trillion versus gold’s private-sector holdings of about $6.2 trillion, J.P. Morgan reasons Bitcoin would need its market cap to increase by about 67% to match gold’s scale – hence the $170,000 target.
Drivers Behind the Shift
The report notes that October’s sharp crypto correction driven by record perpetual-futures liquidations and a major DeFi cyber-incident appears to have completed a phase of deleveraging. With leverage now more normalized, the bank argues that Bitcoin is better positioned to resume upward movement.
In addition, they point out that despite Bitcoin still trading below $105,000, its volatility has compressed relative to gold, contributing to the risk-adjusted valuation gap. Hedging interest, global inflation pressures and the adoption of crypto by institutions further support the bull-case for Bitcoin as a digital-asset hedge rather than speculative token.
For crypto investors, J.P. Morgan’s view signals a potential entry point. If Bitcoin executes toward $170,000, investors buying near $102,000 now could capture over 60% upside. Key indicators to monitor include whether futures open interest falls further, how outflows/inflows in Bitcoin ETFs evolve and whether institutional adoption continues to accelerate.
Still, the path is not without risk. Broader macro conditions, including regulation, central-bank policy and global economic growth could derail Bitcoin’s momentum. If momentum stalls or leverage flows falter, Bitcoin may remain range-bound instead of executing the projected move.
As previously covered, the valuation of crypto assets is undergoing a transformation from speculative stories to analytically framed assets. J.P. Morgan’s model of Bitcoin-versus-gold underscores how traditional financial firms are now applying conventional valuation frameworks to digital assets.
