Recent analysis from JPMorgan indicates that Bitcoin may be significantly undervalued compared to gold, suggesting potential for considerable gains if the ongoing trend of “debasement trade” continues to gain traction. The bank’s analysts propose that Bitcoin could surge to as much as $165,000, which represents an approximate 40% increase from current values, by examining volatility-adjusted comparisons with gold.
The analysts explain that this projection accounts for the capital necessary to hold Bitcoin versus gold, particularly as demand for both assets has risen sharply. The increase in gold prices over the past month has made Bitcoin an increasingly attractive investment option, especially as the Bitcoin-to-gold volatility ratio has fallen below 2.0.
Currently, Bitcoin’s market capitalization stands at $2.3 trillion, which would need to increase by nearly 42% to align with the approximately $6 trillion invested in gold—in various forms—when adjusting for relative risk. Bitcoin has recently achieved a record high at the end of the third quarter of 2025, igniting optimism among investors regarding future price increases as the year concludes. By the end of September, Bitcoin was trading about 5% higher, around $114,000, contrary to the typical expectations of seasonal declines. Historically, following a positive September, Bitcoin has shown a tendency to rally significantly in the fourth quarter, as evidenced by past years like 2015, 2016, 2023, and 2024, where September gains were succeeded by quarter-end increases averaging over 50%.
The analysis underscores a shift among investors toward assets thought to hedge against the devaluation of fiat currencies. This strategy, termed “debasement,” has driven a notable influx of capital into Bitcoin and gold exchange-traded funds (ETFs) over the past year, with retail investors prominently leading the movement. Earlier in 2025, inflows into Bitcoin ETFs outpaced those of gold, but since August, the momentum has shifted, with increased interest in gold due to rising geopolitical tensions and concerns regarding fiscal deficits.
The growing appeal of both Bitcoin and gold reflects broader economic anxieties. With inflation remaining a primary concern, government deficits escalating, and doubts about the independence of central banks on the rise, more investors are reconsidering their reliance on fiat currencies. This trend is particularly palpable in emerging markets, where currency depreciation is more pronounced, making the allure of holding scarce assets even stronger.
While JPMorgan’s projection of Bitcoin reaching $165,000 is not a definitive prediction, it serves as a theoretical benchmark illustrating the price Bitcoin would need to attain to match gold when volatility is factored in. Nonetheless, with an expanding number of ETFs, improved custody solutions, and increased institutional trading activity, Bitcoin’s status as a portfolio hedge appears to be solidifying more than in previous market cycles. As of the most recent data, Bitcoin was trading near $120,000, approximately $45,000 short of the theoretical price suggested by JPMorgan’s model.
