Bitcoin too “undervalued” according to JPMorgan: heading for $126,000
JPMorgan suggests Bitcoin is undervalued. Analyst Nikolaos Panigirtzoglou stated BTC could reach $126,000 this year. This is due to its unusually low volatility. Bitcoin's risk and reward now resemble gold's. This could mark a key time for institutions to adopt Bitcoin. This forecast is important for big investors.
JPMorgan versus Bitcoin.
In summary: JPMorgan thinks Bitcoin is worth less than gold currently. This is because Bitcoin's volatility is very low. The bank's analysts, led by Nikolaos Panigirtzoglou, estimate Bitcoin's "fair value" at $126,000 by year's end. Lower volatility makes Bitcoin a better fit for how institutions manage money.
The difference in volatility between Bitcoin and gold is at its highest. This makes comparing the two assets stronger.
A historic drop in volatility is driving a price increase.
As its upward trend continues, JPMorgan analysts, including Nikolaos Panigirtzoglou, believe Bitcoin's current price is too low compared to gold. This is because its volatility has dropped significantly.
JPMorgan notes Bitcoin's yearly volatility fell from almost 60% to about 30%. This is the lowest it has ever been. The bank sees this big drop as key to Bitcoin's price rise.
JPMorgan experts highlighted that Bitcoin and gold are becoming more alike in risk and reward. Several factors support this change.
The ratio of Bitcoin's volatility to gold's is now 2.0. This is the lowest ever recorded. It means Bitcoin uses twice as much risk capital as gold for institutional investments.
Using a model that adjusts for volatility, Bitcoin's "fair value" is $126,000. This is if its share matches the global private investment in gold, which is about $5 trillion.
Bitcoin's total market value needs to increase by roughly 13% to reach this target.
This analysis provides a clear basis for JPMorgan's prediction. It also shows a major change in how traditional finance views Bitcoin.
Beyond lower volatility, JPMorgan sees another reason for Bitcoin's rise. Corporate treasuries are buying more of it. Over 6% of all Bitcoin is now held by public companies. This helps make the market more stable.
JPMorgan compares this to what happened after the 2008 crisis. Central banks bought many securities. This reduced the impact of bond market changes. "Companies buying Bitcoin acts similarly," the analysts said. They called it a way to "lock up" available supply.
This trend is also helped by companies being added to global stock indexes. This is an important but often missed factor. Michael Saylor's company was added to major indexes. This brought in new money. Metaplanet was recently moved to mid-cap indexes. It was added to the FTSE All-World Index. This triggered automatic purchases.
Meanwhile, KindlyMD, listed on Nasdaq, plans to raise up to $5 billion. Their strategy focuses on Bitcoin as their main reserve. Adam Back and his company BSTR are also trying to buy more Bitcoin. They want to be the second-largest corporate holder, after Saylor's company.
Together, these trends show a structural change in the market.