"Bitcoin's volatility has fallen to a record low, making it more attractive than gold in the eyes of institutional investors," JPMorgan stated bluntly in its latest research report. The Wall Street giant made it clear that Bitcoin is significantly undervalued relative to gold.
According to JPMorgan's analysis, Bitcoin's six-month rolling volatility has plummeted from nearly 60% at the start of the year to around 30%, hitting a record low. Meanwhile, the volatility ratio between Bitcoin and gold has also dropped to a historical low, with Bitcoin now being only twice as volatile as gold.
Plummeting Volatility, Revaluation in Progress
Volatility has long been the primary obstacle preventing traditional institutional investors from fully embracing Bitcoin. Now, this obstacle is rapidly disappearing. JPMorgan's team of analysts elaborated on this shift in detail in their newly released report.
The significant drop in Bitcoin's volatility is not just a change in a technical indicator; it represents a marked improvement in market maturity. The report points out that the decline in volatility directly reflects a shift in Bitcoin's investor base—from being predominantly retail-driven to being dominated by institutional investors.
This shift is akin to the effect of central bank quantitative easing on suppressing bond volatility. Corporate treasuries are now playing a role similar to a "Bitcoin central bank," reducing the circulating supply in the market through continuous buying and holding, thereby dampening price volatility.
JPMorgan employed a volatility-adjusted model to conduct a detailed comparison between Bitcoin and gold. The analysis shows that Bitcoin's market capitalization needs to increase by 13% to match the $5 trillion value of gold in private investment. This calculation yields a fair value for Bitcoin of approximately $126,000, suggesting considerable upside potential from current price levels.
The ETF Battle: An Unprecedented Capital Migration
If the decline in volatility is an internal sign of Bitcoin's maturation, then the approval and launch of spot Bitcoin ETFs serve as an external catalyst accelerating institutional adoption. This milestone event has opened up unprecedented investment channels for ordinary investors and institutions alike, directly triggering an "Assets Under Management (AUM)" competition between Bitcoin and gold.
Latest data from Bespoke Investment Group shows that the AUM of Bitcoin funds has reached approximately $150 billion, while the AUM of gold funds stands at about $180 billion. The gap between the two has narrowed to just $30 billion, demonstrating a startling catch-up speed.
At the individual fund level, the world's largest gold ETF, SPDR Gold Shares (GLD), holds assets worth approximately $104.16 billion. In contrast, first-tier Bitcoin ETFs (like BlackRock's IBIT) have accumulated around $82.68 billion in just one year. This not only reflects a shift in investment preferences but also confirms Bitcoin's growing importance as a component in global asset allocation.
JPMorgan analysts believe: "Bitcoin is becoming increasingly attractive, especially for institutional portfolios. Lower volatility combined with improved regulatory clarity creates a perfect environment for adoption."
Technical Outlook
Following the release of JPMorgan's report, Bitcoin's price saw a slight rebound but subsequently pulled back. According to data from TradingView, at the time of writing, Bitcoin had risen as much as 2.3% during the day to approximately $113,479 before retreating about 1% to around $112,272.
Veteran trader Peter Brandt believes that although Bitcoin has recently rebounded, to completely break away from the medium-term bearish sentiment, the price must break through the key resistance level of $117,570.
However, from a longer-term perspective, several technical indicators still point to bullishness. Bitcoin's ability to hold firmly above $110,000 indicates that institutional investors are using every pullback to steadily accumulate positions, building momentum for a volatile upward trend in the coming months.
JPMorgan's $126,000 target might just be a new starting point. If Bitcoin continues to absorb institutional funds at its current pace, the narrative of "digital gold" surpassing traditional gold may no longer be a theoretical speculation but gradually become reality.
