Wall Street bank JPMorgan says Bitcoin (BTC) is trading too cheap relative to gold as its volatility falls to historic lows. In a research report published Thursday, the bank’s analysts stated that on a volatility-adjusted basis, Bitcoin is undervalued by around $16,000 versus gold, suggesting room for upside.
Bitcoin’s Volatility Hits Record Low
The report said bitcoin’s six-month rolling volatility has fallen from almost 60% at the start of this year to about 30% now. This is the lowest reading ever recorded. It also means bitcoin is now only twice as volatile as gold, which is the smallest gap ever seen between the two.
According to JPMorgan’s analysts, this drop makes bitcoin look more appealing for investors, especially for those building large portfolios. The bank said that on a volatility-adjusted basis, bitcoin’s market value would need to rise by about 13% to be in line with gold’s $5 trillion worth of private investment.
That would put the fair price of bitcoin at around $126,000, which is far above today’s market level which currently holds steady at $112k, according to data from CoinMarketCap.
“Bitcoin’s fair value sits around $126,000,” Nikolaos Panigirtzoglou, the managing director at JPMorgan, said in an interview. “Yes this is the upside we highlighted in our note, which we envisage to be reached by year end,”
Corporate Treasuries are Fueling Demand
The bank linked the fall in volatility to a sharp increase in purchases by corporate treasuries. According to the bank, companies now hold more than 6% of bitcoin’s total supply. The analysts compared this pattern to the way central banks reduced swings in bond markets after the 2008 crisis by buying assets and holding them for long periods.
JPMorgan also noted that passive inflows are helping bitcoin. This is happening as more companies that hold bitcoin are added to global stock indexes. For instance, Strategy, previously called MicroStrategy, was included in major benchmarks, while Japanese firm Metaplanet was recently upgraded into FTSE Russell’s mid-cap category, which led to its inclusion in the FTSE All-World Index.
Competition Among Firms is Rising
Moreover, Corporate competition to accumulate Bitcoin is also increasing. Nasdaq-listed KindlyMD recently filed to raise up to $5 billion after buying $679 million worth of bitcoin and naming it the firm’s primary reserve.
Meanwhile, Adam Back’s company, Twenty One Capital, is working to challenge Marathon Digital’s position as the second-largest corporate holder of bitcoin, ranking behind Strategy led by Michael Saylor.
According to JPMorgan, these changes are helping bitcoin look undervalued compared with gold. The bank’s report suggests more growth could come if these trends continue.
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