JPMorgan says bitcoin's lower volatility relative to gold might make it 'more attractive' in long term
Summary
ETF redemptions and futures liquidations are currently pressuring crypto markets, according to the bank. Meanwhile, increasing gold volatility is subtly enhancing Bitcoin's long-term investment appeal, highlighting a complex interplay in the financial landscape.
Key Insights
What is the bitcoin-to-gold volatility ratio, and why does its recent decline make Bitcoin more attractive?
The bitcoin-to-gold volatility ratio measures Bitcoin's volatility relative to gold's; it has fallen to a record low around 1.5, meaning Bitcoin now consumes less risk capital per unit than historically, narrowing the risk gap and enhancing its long-term appeal on a volatility-adjusted basis compared to gold.[1][2]
How does JPMorgan calculate Bitcoin's theoretical price target relative to gold on a volatility-adjusted basis?
JPMorgan estimates Bitcoin's market cap would need to match private-sector gold investment levels (around $8 trillion) on a volatility-adjusted basis, implying a price near $266,000 per BTC, as gold's outperformance and rising volatility have made Bitcoin undervalued by about $68,000 currently.[1][2][3]