Bitcoin's Fair Value Relative to Gold
Bitcoin is currently trading below its fair value when compared to gold, especially when adjusted for volatility, according to analysts at JPMorgan. The recent surge in gold's volatility, as it reached all-time highs in October, has made the precious metal a riskier asset. This shift, in turn, makes Bitcoin (BTC) appear more attractive to investors. The bitcoin-to-gold volatility ratio has fallen to 1.8, indicating that BTC carries 1.8 times the risk of gold.
By taking into account this volatility ratio, which implies that bitcoin currently consumes 1.8 times more risk capital than gold, then mechanically, the market cap of bitcoin at $2.1 trillion currently would have to rise by close to 67%, implying a theoretical bitcoin price of close to $170,000.
This analysis suggests significant upside potential for Bitcoin over the next 6 to 12 months, according to JPMorgan.
This theoretical price forecast from JPMorgan emerges at a time when several market analysts and investment firms have lowered their BTC price predictions. This comes after Bitcoin fell below $100,000 on Tuesday, breaching a critical psychological support level for the first time in four months.
Market Analysts Lower Bitcoin Price Predictions
Some analysts now believe that BTC is unlikely to reclaim the $125,000 price level by the end of 2025. This sentiment is influenced by several factors, including macroeconomic headwinds such as tariffs, and the market crash on October 10, which resulted in the largest 24-hour liquidation in crypto history.
Investment company Galaxy has revised its Bitcoin 2025 forecast downward to $120,000 from a previous projection of $185,000. This adjustment, announced on Wednesday, takes into account factors such as BTC whales offloading approximately 400,000 coins in October, investor rotation into competing narratives, and evolving market dynamics.
Alex Thorn, Galaxy's head of firmwide research, stated that Bitcoin has entered a new phase, which they term the "maturity era." This era is characterized by dominant institutional absorption, passive flows, and lower volatility.
Thorn further explained that the presence of exchange-traded funds (ETFs) actively absorbing liquidity means that Bitcoin's gains are likely to occur at a more gradual pace compared to historical trends.