Bitcoin’s Fair Value Is $170K, JPMorgan Argues in Gold-Based Model

Core Viewpoint - JPMorgan analysts forecast Bitcoin (BTC) could reach $170,000 within the next six to 12 months, driven by recent market conditions and a comparison to gold [1][3]. Market Conditions - Recent deleveraging in crypto derivatives, particularly bitcoin perpetual futures, has stabilized the market, setting the stage for potential upside [2][6]. - The October and November selloffs were attributed to a wave of liquidations and a $120 million exploit, but the report suggests that this deleveraging is likely behind us [2]. Price Projection - The price projection of $170,000 is based on Bitcoin's positioning as "digital gold," with the current market cap of around $2.1 trillion needing to grow by two-thirds to match gold's $6.2 trillion investment exposure [3]. - Bitcoin is currently trading approximately $68,000 below the gold-based fair value benchmark [4]. Investor Behavior - Shifting investor behavior indicates that while retail investors are buying U.S. equities and gold, Bitcoin may become a preferred hedge against equity risk due to increasing gold volatility [5]. - Recent surges in gold purchases by central banks and retail buyers have occurred, but Bitcoin appears more attractive from a risk-adjusted perspective [5]. Liquidity and Market Support - JPMorgan downplayed concerns regarding tightening U.S. banking reserves affecting broader markets, noting that while bank liquidity is strained, broader money supply and non-bank liquidity are expanding, supporting risk assets like equities and crypto [6]. - The bank's projection is described as a mechanical exercise rather than based solely on sentiment or momentum [6].