JP Morgan: Bitcoin Valuation ‘Undervalued’ as Market Volatility Decreases and Institutional Demand Grows

According to JP Morgan analysts, Bitcoin’s price should see an increase as its volatility diminishes, making it more appealing for institutional investors.

The analysts indicated that the leading digital asset’s value could reach $126,000 per Bitcoin, acknowledging that BTC might achieve that figure by the end of the year.

Currently, Bitcoin is trading around $111,950, according to CoinGecko, showing little change over the past 24 hours and week. Earlier this month, BTC reached a record high of $124,128.

“The current Bitcoin price appears undervalued compared to gold as Bitcoin volatility hits historically low levels,” stated the note by Nikolaos Panigirtzoglou.

The extreme price fluctuations that typically define Bitcoin have diminished since institutional investments surged and spot Bitcoin ETFs began trading in the U.S. last year.

Analysts have noted to Decrypt that as Bitcoin evolves, it’s becoming less prone to sudden declines and spikes.

“A notable trend this year has been the fall in Bitcoin [volatility], dropping from approximately 60% at the start of the year to a historically low 30%,” the note elaborated.

“We attribute the reduction in Bitcoin volatility to the increasing purchases by corporate treasuries.”

The report concluded: “It is reasonable to anticipate that the allocations to Bitcoin by institutional investors may reach levels comparable to those of traditional asset classes like gold if volatility aligns.”

Several publicly traded companies have followed the example set by Nasdaq-listed Strategy—formerly MicroStrategy—this year by acquiring Bitcoin to enhance shareholder value. Strategy (NASDAQ: MSTR) started its Bitcoin acquisitions in 2020, significantly boosting its stock price.

The comparison between Bitcoin and gold has persisted for years, as Bitcoin has often shown a correlation with the precious metal. Proponents refer to the leading cryptocurrency as “digital gold.”

However, since its launch in 2009, Bitcoin has also exhibited correlations with U.S. equities, particularly technology stocks.