Daniel Walker
JPMorgan analysts say the current price of Bitcoin is undervalued compared to gold, as its volatility has dropped to record lows. At the beginning of the year, Bitcoin’s volatility was close to 60%, but it has now fallen to around 30%, the lowest level ever recorded.
In a note led by managing director Nikolaos Panigirtzoglou, JPMorgan estimated Bitcoin’s fair value at $126,000. Panigirtzoglou added that this level could be reached by the end of the year.
One of the key factors suppressing Bitcoin’s swings has been the rise in corporate treasury holdings, which now represent more than 6% of the total supply. Analysts compared this trend to quantitative easing after 2008, where central banks reduced volatility in bond markets by locking assets into passive reserves.
Index Inclusions Boost Passive Inflows
Passive demand for Bitcoin is also being fueled by its inclusion in global equity indices. Strategy’s (formerly MicroStrategy’s) addition to major benchmarks has brought in new capital. Meanwhile, Metaplanet’s promotion to mid-cap status led to its inclusion in the FTSE All-World Index, sparking further inflows.
Rising Competition Among Corporate Holders
Competition among corporations is heating up as more firms adopt Bitcoin as a reserve asset. KindlyMD, a Nasdaq-listed company, has filed to raise as much as $5 billion after naming Bitcoin its primary reserve asset. Additionally, BSTR, founded by Adam Back, is aiming to challenge Marathon Digital and become the second-largest corporate Bitcoin holder after Strategy.
Bitcoin vs. Gold: Risk-Adjusted Comparison
The combination of treasury accumulation, index-driven flows, and reduced volatility is making Bitcoin more attractive to institutional investors. Lower volatility makes it easier for funds to allocate capital, and the gap between Bitcoin and gold in risk-adjusted terms is now closer than ever.
According to JPMorgan, the volatility ratio of Bitcoin to gold has dropped to 2.0 — the lowest on record. This means Bitcoin consumes only twice the risk capital of gold in portfolio allocations. Based on this ratio, Bitcoin’s market cap of $2.2 trillion would need to rise by around 13%, implying a price target of $126,000, to match the $5 trillion private gold investment market.
The analysts highlighted that Bitcoin previously traded $36,000 above its fair value at the end of 2024, but now sits about $13,000 below that benchmark, suggesting further upside potential.
