Prediction made by JPMorgan suggests Bitcoin could reach $126,000 by the end of the year, indicating an underestimation of its current value.
In a recent analysis by JP Morgan, the managing director of their analyst team, Nikolaos Panigirtzoglou, has suggested that Bitcoin's current price is considered 'undervalued' against gold. This assessment is based on the Bitcoin/Gold ratio, which has dropped to a record low of 2, according to the analysts.
The decrease in Bitcoin's volatility, from over 60% to record lows of 30%, presents a strong buying opportunity, as per JP Morgan analysts. They attribute this lower volatility to a significant role played by the strong accumulation of Bitcoin by corporate treasuries, ETFs, public companies, governments, DeFi protocols, and Bitcoin mining companies. Collectively, these institutions control over 17.3% of the total Bitcoin supply, with hundreds of billions of dollars invested in Bitcoin.
To reach the $5 trillion value of gold held in private investments, Bitcoin would need approximately a 13% increase in market value. At press time, Bitcoin's market cap stood at $2.2 trillion, a 13% increase would push BTC's fair value to around $126,000. This target, suggested by Panigirtzoglou, could be reached by the end of the year.
On-chain data supports this view, showing that Bitcoin remains undervalued and is approaching a local bottom. The True MVRV valuation metric, which measures the ratio of the market value to realized value of Bitcoin, supports this view, with previous local bottoms in May and June occurring when the indicator hit 1.6.
If July inflation (PCE) data comes in cooler than expected, it could boost September rate cut expectations and BTC price recovery. However, a hotter or higher inflation print could trigger a bearish sentiment in the short term.
It's worth noting that Bitcoin consumed twice as much risk capital as gold in client portfolios, according to JP Morgan analysts. This indicates a growing interest in Bitcoin as a store of value and a potential safe haven asset.
In a separate development, the Commodity Futures Trading Commission (CFTC) is set to open offshore crypto exchanges to U.S. citizens, which could further boost institutional interest in Bitcoin.
However, as always, investors are advised to conduct their own research and consider their risk tolerance before investing in any asset, including Bitcoin.
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