Banking giant JPMorgan says bitcoin could climb to around $165,000 on a volatility-adjusted basis relative to gold, highlighting what the bank sees as significant upside if the so-called “debasement trade” continues to gain momentum.
The Wall Street lender’s models suggest that bitcoin would need to rise about 40% from current levels to match the scale of private gold holdings once risk is accounted for.
The world's largest cryptocurrency was trading around $119,000 at publication time.
The debasement trade involves buying assets such as gold or bitcoin to hedge against the devaluation of fiat currencies.
The bank's projection comes as retail investors accelerated their embrace of the debasement trade, pouring into both bitcoin and gold exchange-traded funds over the past quarter.
Analysts led by Nikolaos Panigirtzoglou noted that flows into these products have surged since late 2024, a trend that picked up ahead of the U.S. presidential election.
The analysts framed the trade as a response to long-term inflation concerns, ballooning government deficits, questions about Federal Reserve independence, waning trust in fiat currencies in some emerging markets, and a broader move to diversify away from the U.S. dollar.
Cumulative flows into spot bitcoin and gold ETFs have risen sharply, JPMorgan said, with retail buyers driving much of the activity. Bitcoin exchange-traded fund (ETFs) initially outpaced gold earlier in the year, particularly after “Liberation Day,” but gold ETF inflows have been catching up since August, narrowing the gap.
Institutional investors have also been participating, according to JPMorgan, though mainly via Chicago Mercantile Exchange (CME) bitcoin and gold futures rather than ETFs. The bank’s proxy based on open interest shows institutions have been net buyers since 2024, but their momentum has recently lagged retail demand.
The steep rise in gold prices over the past month has also bolstered bitcoin’s relative appeal, as the bitcoin-to-gold volatility ratio has drifted below 2.0. That shift underscores the bank’s view that bitcoin remains undervalued relative to gold, with its current price about $50,000 below where JPMorgan’s model suggests it should be.
Read more: When Could Bitcoin Break Out to New Highs? Watch Out for Gold
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