Bitcoin surged past the $120,000 mark in recent trading sessions, driven by a significant forecast adjustment from JPMorgan Chase, which raised its year-end price target for the cryptocurrency to $165,000. Analysts from the bank now predict that Bitcoin could potentially climb to this new target by the end of 2025, primarily due to its perceived undervaluation compared to gold when adjusted for volatility.
According to reports from The Block, the BTC-to-gold volatility ratio has recently dipped below 2.0. This indicates that Bitcoin would need to appreciate approximately 42% to align with the investment levels typically associated with gold. Remarkably, this represents a turnaround from late 2024 when Bitcoin was considered overvalued by $36,000, contrasting with its current undervaluation of $46,000.
The surge in Bitcoin’s value is largely attributed to a retail-driven “debasement trade.” Investors are increasingly gravitating towards Bitcoin and gold exchange-traded funds (ETFs) as a buffer against economic uncertainties such as inflation, concerns about central bank credibility, and the weakening strength of fiat currencies, especially those in emerging markets. While institutions are still active in Chicago Mercantile Exchange (CME) futures markets, the data indicates that retail investors dominate the ETF space.
The rise of gold prices has further emphasized Bitcoin’s relative worth, prompting JPMorgan to adjust its forecast from an initial $126,000 in August to the current target of $165,000.
On October 1, Bitcoin ETFs attracted an impressive inflow of $675.8 million. BlackRock led this charge with $405.5 million, followed by Fidelity with $179.3 million. Meanwhile, open interest in futures contracts surged to $80.4 billion, marking the highest level since mid-September, which suggests heightened institutional hedging activity.
However, these positive developments come amidst concerns regarding a potential U.S. government shutdown, which could affect the approval timelines for new ETF proposals. ETFPrime host Nate Geraci has highlighted that a prolonged shutdown would likely have repercussions on the launch of new spot crypto ETFs.
As the market evolves, investors continue to monitor these shifting dynamics closely, seeking to stay informed on the latest trends and opportunities in the burgeoning cryptocurrency landscape.
