Top US bank JP Morgan has continued to predict that Bitcoin would follow the trajectory of gold, this time citing the volatility adjustment metric.
JP Morgan claims that Bitcoin is undervalued compared to gold. This sentiment is widespread among prominent industry leaders as they match the pioneering cryptocurrency toe-to-toe with the precious metal.
The $3.6 trillion bank then projected that Bitcoin would climb to $165,000, closing the gap with gold’s current volatility-adjusted valuation. At the time of writing, Bitcoin was trading at $119,283, and a rally to the new all-time high would mark a 38% increase.
Bitcoin to New ATH to Match Gold in Debasement Trade
For context, gold and Bitcoin have emerged as stores of value, serving as hedges against currency debasement. Exchanging fiat for these assets constitutes the “debasement trade,” as investors shift from less stable currencies to a more established asset class.
Hence, the volatility of Bitcoin and gold should be closely matched. However, gold has been on parabolic expansion over the past week, recently reaching a new all-time high of $3,900 today.
This has steered the Bitcoin-to-gold volatility ratio lower, hence creating the disparity JP Morgan highlighted. To close this gap, the bank suggested that Bitcoin would have to increase by almost 40% to match gold’s current volatility ratio.
Bullish Sentiment Adds to Calls for Higher Bitcoin Prices
Meanwhile, JP Morgan adds to the voices suggesting that Bitcoin could go higher. The bullish sentiment has gained momentum lately, particularly as we enter the fourth quarter of the year.
This period has historically coincided with a massive price lift for Bitcoin, especially during bull market cycles. Precisely, Bitcoin has recorded an average gain of 20% in October since 2013, fuelling the prospects of a rise to new all-time highs this season.
Technical analysis also supports this bullish belief, with an analysis from Egrag Crypto identifying positive developments surrounding the price of Bitcoin. If current levels hold, the market commentator also predicts that the premier asset could rally to unprecedented price levels.
The Gold vs Bitcoin Comparison
Meanwhile, market observers have continued to compare gold to Bitcoin, despite the latter being relatively young. This has brought Bitcoin the “digital gold” and “modern-day gold” tags, further increasing its appeal among both retail and institutional investors.
With their qualities closely matched, some have predicted that Bitcoin will capture a chunk of gold’s $26 trillion market cap. Others believe that Bitcoin’s digital, liquid, and scarce qualities make it superior and that it will surpass gold in the long term.
One of those sharing this sentiment is Mexican billionaire Ricardo Salinas Pliego, who projected that Bitcoin will be more valuable than gold. Coinbase CEO Brian Armstrong also sees Bitcoin gaining more mainstream adoption than gold, predicting that countries would hold more of the digital asset over time.
DisClamier: This content is informational and should not be considered financial advice. The views expressed in this article may include the author's personal opinions and do not reflect The Crypto Basic opinion. Readers are encouraged to do thorough research before making any investment decisions. The Crypto Basic is not responsible for any financial losses.
