JPMorgan’s research division, led by Nikolaos Panigirtzoglou, recently announced an ambitious forecast for Bitcoin‘s price, predicting it could reach $170,000 within the next six to twelve months. This projection came during a time when Bitcoin was valued at roughly $103,000, illustrating a significant potential increase according to the banking giant’s report.
How Does Bitcoin’s Value Measure Against Gold?
The analysis revealed that Bitcoin’s market capitalization, approximately $2.1 trillion, must grow by 67% to realign with the value of gold held privately, which currently stands at about $6.2 trillion. The report highlighted that Bitcoin is undervalued when assessed against a volatility-adjusted benchmark in comparison to gold, placing its fair value around $68,000.
What’s Behind the Price Prediction?
The reported calculations suggest Bitcoin’s volatility makes it appealing in terms of risk and return, outpacing gold. The bank uses a volatility ratio of 1.8, indicating Bitcoin requires roughly 1.8 times the risk capital of gold, emphasizing its potential despite risks.
JPMorgan’s report further detailed the state of leverage unwinding in the futures market, citing that it is largely complete following significant liquidations in October. The stabilization in market open positions suggests a more balanced trading environment.
Signals point to such unwinding nearing completion following a second wave of liquidations, with notable incidents like a $120 million Balancer hack impacting investor sentiment. Unlike Bitcoin, Ethereum contracts on the CME showed higher liquidation levels, alongside ETF outflows stalling in recent weeks.
JPMorgan revised their Bitcoin target upwards from previous estimates of $165,000 in October and $126,000 in August, maintaining confidence in its growth potential through a volatility lens.
“Bitcoin still offers significant upside measured on volatility-adjusted metrics,” the JPMorgan research team noted, underscoring favorable prospects.
In light of the adjustments and ongoing market developments, Bitcoin was recorded trading at $101,892, down slightly over the past 24 hours according to CryptoAppsy data. The banking giant’s projections continue to influence market perspectives as investors anticipate future trends.
