JPMorgan: De-leveraging nearing the end, BTC expected to challenge $170,000 within a year?

Original Title: Bitcoin’s Fair Value Is $170K, JPMorgan Argues in Gold-Based Model

Original author: Helene Braun

Original source: CoinDesk

Compiled by: Mars Finance, Daisy

According to venture capital indicators, the bank states that the value of Bitcoin should reach two-thirds of the private investment base of gold, exceeding the current level of approximately $102,000.

Key Points Overview:

JPMorgan analysts predict that, based on the historical valuation relationship between Bitcoin and gold, Bitcoin could rise to $170,000 within the next 6 to 12 months.

In a report on Thursday, they pointed out that the recent decline in the cryptocurrency market is mainly due to the forced liquidations in perpetual futures, but the market's deleveraging phase has basically come to an end.

With the increase in gold investments and Bitcoin being relatively undervalued, JPMorgan believes there is significant upside potential for Bitcoin in the coming months.

J.P. Morgan analysts stated in their latest forecast that Bitcoin still has plenty of room to rise—and it could come quickly. They expect this cryptocurrency to reach as high as $170,000 within the next 6 to 12 months.

In a report released this week, strategist Nikolaos Panigirtzoglou and his team pointed out that the deleveraging of the crypto derivatives market, particularly bitcoin perpetual futures, has largely come to an end, laying the foundation for the market to resume its upward trend.

The report states: “The recent stabilization of the market indicates that the deleveraging process of Bitcoin perpetual futures may have come to an end.” This sentence refers to a series of sell-off events during October and November, when the market experienced large-scale liquidations and a $120 million loss caused by a hack on Balancer.

JPMorgan's price prediction is based on a comparison with gold. Bitcoin has long been regarded as “digital gold,” but the bank's model shows that, on a risk-adjusted basis, Bitcoin's current trading price is far below where it should be.

The report assumes that Bitcoin requires 1.8 times the risk capital compared to gold. Considering the current private gold investment of about $6.2 trillion (including ETFs, gold bars, and coins), to match this scale of investment, Bitcoin's market capitalization would need to increase by about two-thirds—from the current approximately $2.1 trillion to the corresponding level. This means that the price of Bitcoin could reach $170,000, a significant increase from the current approximately $102,000.

This stands in stark contrast to the situation at the end of 2024, when the trading price of Bitcoin was far above the fair value estimated by the JPMorgan model.

The analysis team stated that the current price of Bitcoin is approximately $68,000 lower than the fair value benchmark based on gold.

This prediction comes at a time when there is a significant change in investor cross-asset allocation behavior. JPMorgan pointed out that retail investors continue to buy US stocks and gold, but as gold volatility increases, Bitcoin may increasingly become the preferred asset to hedge against stock market risks. Recently, both central banks and retail investors have significantly increased their gold purchases in dollar terms, but from the perspective of risk-adjusted returns, Bitcoin's current appeal is stronger.

JPMorgan simultaneously downplayed market concerns about the tightening of reserves in the U.S. banking system spreading to broader markets. The bank believes that while liquidity in the banking system is indeed under pressure, overall money supply and non-bank liquidity are still expanding, which continues to support risk assets such as stocks and cryptocurrencies.

However, JPMorgan emphasized that this prediction is not based on market sentiment or short-term momentum judgments. “This is a mechanical inference based on models,” the analysis team wrote.