JPMorgan Analysts Project Bitcoin to Soar to $170,000 Amidst Market Deleveraging and Gold Comparison

New York, NY – Analysts at JPMorgan Chase are forecasting a significant surge for Bitcoin, projecting its value to reach approximately $170,000 within the next 6 to 12 months. This optimistic outlook is underpinned by two key factors: the substantial completion of deleveraging within the cryptocurrency market and an improved volatility profile for Bitcoin relative to gold.

Crypto Market Stability Emerges After Recent Volatility

A report released on Wednesday by a JPMorgan analytical team, spearheaded by Managing Director Nikolaos Panigirtzoglou, detailed the recent turbulent period in the crypto markets. Bitcoin experienced a nearly 20% correction since reaching its all-time high in early October. The most pronounced dip occurred on October 10, triggered by the largest liquidation event in the history of the perpetual futures market. Further market jitters followed on November 3, when a hack on the DeFi protocol Balancer led to losses exceeding $120 million, impacting investor confidence.

Despite these dramatic short-term fluctuations, the analysts assert that “the deleveraging phase of perpetual contracts has largely concluded.” They highlight that the ratio of Bitcoin perpetual futures open interest to market capitalization has normalized over several weeks, retreating from previously elevated levels.

A similar, albeit less extensive, deleveraging trend was observed in the Ethereum market. Furthermore, while some minor redemptions have been noted in certain Bitcoin ETFs recently, these are significantly outweighed by the robust capital inflows witnessed in early October.

The report emphasizes: “Perpetual futures remain the most crucial indicator of market sentiment. The recent signs of stabilization strongly suggest that the deleveraging process in perpetual futures has likely reached its end.”

Bitcoin’s Growing Appeal Against Gold

A cornerstone of JPMorgan’s bullish projection is Bitcoin’s increasingly attractive position when compared to gold. The report points out that recent heightened volatility in gold has, on a risk-adjusted basis, made Bitcoin a more compelling investment option for many.

Crucially, the Bitcoin-to-gold volatility ratio has now dropped below 2.0. This means that the risk capital required to invest in Bitcoin is currently about 1.8 times that needed for gold, indicating an improvement in Bitcoin’s relative risk profile.

The Path to $170,000: A Market Capitalization Alignment

JPMorgan’s price target is derived from a compelling market capitalization comparison. The private sector currently holds approximately $6.2 trillion in gold through ETFs and physical assets. To match this scale of investment, Bitcoin’s present market capitalization of $2.1 trillion would need to increase by nearly 67%. Such an increase would propel Bitcoin’s “theoretical price” towards the $170,000 mark.

The report further elaborates that, based on a gold volatility-adjusted model, Bitcoin’s “fair value” stands at around $170,000. With its current price hovering at approximately $101,000, Bitcoin is deemed to be trading at a discount of roughly $69,000 below its fair value. This substantial discrepancy leads analysts to conclude that Bitcoin possesses considerable upside potential over the coming 6 to 12 months.

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