According to JPMorgan analysts, the current price of Bitcoin is too low compared to gold, as BTC volatility has fallen to record lows.
Bitcoin volatility has dropped from nearly 60% at the start of the year to the current 30%, a historic low. With this in mind, analysts led by managing director Nikolaos Panigirtzoglou believe that Bitcoin’s fair value is around $126,000.
Yes, this is the growth potential that… we expect by the end of the year,” Panigirtzoglou noted.
A surge in corporate Treasury bond purchases, which now account for more than 6% of the total supply of bitcoin, has played a major role in dampening volatility. JPMorgan compared the dynamic to central bank quantitative easing after 2008, which smoothed bond market swings by locking assets into passive assets.
Passive inflow of funds into Bitcoin also driven by global index inclusion. Analysts noted that the addition of Strategy (formerly MicroStrategy) to major benchmarks has already attracted new investment, while Metaplanet’s promotion to mid-cap status in the FTSE Russell indices has led to the company being included in the FTSE All-World index.
Analysts believe that the combination of corporate Treasury accumulation, index-driven inflows and lower volatility is making Bitcoin more attractive to invest in. Lower volatility makes it easier for institutional investors to allocate capital because Bitcoin and gold are now as close as possible in terms of risk.
According to analysts at JPMorgan, the volatility ratio of bitcoin to gold has fallen to 2,0, the lowest on record. This means that at present Bitcoin absorbs twice as much risk capital as gold in portfolio allocations.
Based on this, Bitcoin’s $2,2 trillion market cap should grow by about 13%, implying a theoretical price of $126,000.
