JPMorgan: Bitcoin price should be $45,000, market cap matching gold is not reasonable

After previously claiming that Bitcoin could drop to $42,000 following the halving, analysts at JPMorgan Chase have issued a new report stating that Bitcoin should be priced at $45,000, and considering factors such as risk and volatility, its market value is unlikely to surpass that of gold.

JPMorgan: Bitcoin Market Cap Should Not Exceed Gold

According to The Block, an analysis team led by Nikolaos Panigirtzoglou at JPMorgan released a report on March 7th, pointing out a key factor often overlooked in the debate over the allocation of Bitcoin and gold in investment portfolios: "risk."

The report emphasizes that Bitcoin's volatility is much higher than that of gold. Therefore, even if BTC's market cap were to rise to levels close to gold, Bitcoin's role in the investment portfolio should not be on par with gold.

Gold Market Cap at $3.3 Trillion for Investment Purposes

Analysts point out that the market cap of gold for investment purposes is about $3.3 trillion. Many cryptocurrency bulls believe that Bitcoin's market cap will also rise to $3.3 trillion.

This means that the price of Bitcoin still needs to increase by 2.5 times to reach $168,000 per coin.

Bitcoin's Volatility 3.7 Times That of Gold

The analysts then mention that investors consider volatility and risk when allocating assets across asset classes, with Bitcoin's volatility being about 3.7 times that of gold.

This implies that considering volatility and risk, Bitcoin's market cap cannot surpass that of gold.

The report argues that Bitcoin's market cap should be $0.9 trillion, a number derived by dividing $3.3 trillion by the volatility of 3.7.

This suggests that the price of Bitcoin should be $45,000, significantly lower than the current level, indicating that Bitcoin's price is overvalued. With FOMO sentiment prevailing, investors' allocation of Bitcoin in their portfolios has irrationally exceeded gold, ignoring risks such as volatility.

JPMorgan Also Unconvinced by Bitcoin ETF Data

Since the launch of Bitcoin spot ETFs, the total outflow of GBTC is $10 billion, while the total net inflow of Bitcoin spot ETFs is $9 billion.

JPMorgan analysts are also skeptical of this $9 billion, believing that it does not entirely represent "new capital" flowing into the crypto space, as it could also be retail investors shifting from existing venues such as exchanges to Bitcoin ETFs.

Earlier reports from JPMorgan also indicated that after Bitcoin's halving in April, the reduction in rewards and the increase in production costs will negatively impact miners' profits, with the price of Bitcoin estimated to fall to $42,000.

JPMorgan: Bitcoin to Retrace to $42,000 after Halving in April