Bitcoin, currently trading around $122,235, may be undervalued by roughly 38% to 40%, according to JPMorgan analysts.
Analysts at the $4 trillion banking giant now place a fair value target for the cryptocurrency at $165,000 by the end of the year.
The bank’s latest report cites gold’s strong performance and a narrowing volatility gap between the two assets as the primary reasons for this upward revision.
The note emphasizes that Bitcoin’s role in the so-called “debasement trade” — where investors allocate to gold and Bitcoin as hedges against fiat currency debasement and rising sovereign debt — has strengthened.
Bitcoin Versus Gold: Volatility and Market Cap
JPMorgan highlights a significant development in the volatility ratio between Bitcoin and gold. The bitcoin-to-gold volatility ratio has dropped below 2.0, meaning Bitcoin now consumes about 1.85 times more risk capital than gold, the lowest level recorded in recent years.
Analysts compare Bitcoin’s current $2.4 trillion market capitalization with the estimated $6 trillion allocated to gold in the form of bars, coins, and exchange-traded funds. If Bitcoin were to match gold on a volatility-adjusted basis, its price could rise by over 40%, reaching the $165,000 target.
Institutional activity, however, remains concentrated in the CME futures market rather than direct ETF allocations. JPMorgan notes that while institutions have been net buyers since 2024, retail investors account for the bulk of spot ETF demand.
JPMorgan set its Bitcoin fair value target at $122,000. The increase to $165,000 reflects both gold’s strong price momentum and updated volatility measures between the two assets.
This marks a sharp shift from late 2024, when the bank’s analysts stated that Bitcoin was overvalued by approximately $36,000 using the same gold comparison model. The updated analysis now suggests the cryptocurrency is undervalued by roughly $46,000.
JPMorgan’s framework is primarily mechanical and relies on a volatility-adjusted comparison with gold. Market conditions may not follow this linear model.
Gold’s performance, changes in central bank policy, and regulatory developments around digital assets could all alter the trajectory.
JPMorgan’s $165,000 price target implies 38% to 42% potential upside from current levels. The analysis strengthens the argument that Bitcoin is becoming a viable alternative to gold in diversified portfolios, particularly as volatility metrics between the two assets converge.
If ETF inflows continue and institutional adoption expands, Bitcoin could capture a larger share of the capital traditionally allocated to gold.
