JPMorgan analysts, led by Nikolaos Panigirtzoglou, have just thrown a bold prediction on the table: Bitcoin may reach USD 170,000 in the next 6-12 months. Sound familiar? Wall Street no longer criticizes the cryptocurrency industry – now it counts on potential profits.
What actually happened?
The cryptocurrency market has corrected almost 20% since recent highs. The sharpest hit came on October 10, when there were record liquidations in the history of perpetual futures contracts (flash crush). Another blow (November 3) was reinforced by an exploit of the Balancer protocol for over USD 120 million, which again fueled security concerns in the DeFi sector.
But there’s a catch: JPMorgan analysts say the deleveraging phase is coming to an end. The ratio of bitcoin perpetual futures open interest to market capitalization has returned to historic norms in just a few weeks. Similar patterns can be seen in Ethereum, although the process there was less clear.
Perpetual futures contracts are the most important instrument to observe in the current situation
– write analysts. Their stabilization suggests that the worst is already behind us.
Gold loses its shine, Bitcoin gains – JPMorgan forecasts
The key to the optimistic forecast is the increasing volatility of gold, which makes Bitcoin more attractive on a risk-adjusted basis. Currently, BTC’s volatility ratio to gold has dropped below 2.0, which means that Bitcoin consumes approximately 1.8 times more risk capital than gold.
With Bitcoin’s current market capitalization of around $2.1 trillion, an increase of 67% would be needed to match the $6.2 trillion invested in gold by ETFs and physical assets. This brings the theoretical price close to $170,000. The current BTC price (around $103,000) is approximately $68,000 below the volatility-adjusted fair value of gold. For comparison: in August, JPMorgan forecast $126,000 by the end of the year. Bitcoin hit a record high of $126,200 on October 6, just before the October crash.
Will it be different this time? We’ll find out in the coming months, but JPMorgan’s forecasts clearly show that Wall Street is no longer ignoring Bitcoin. Wall Street is counting on him.
