Bitcoin's Undervaluation vs. Gold: Is $170K a Realistic Target?

The debate over Bitcoin's fair value has long centered on its role as a store of value and its potential to rival traditional assets like gold. Recent analysis from JPMorgan suggests that Bitcoin is significantly undervalued when adjusted for volatility, with a theoretical price target of $170,000 within six to twelve months. This assessment, rooted in a risk-adjusted valuation model and structural market dynamics, raises critical questions about Bitcoin's trajectory and the forces shaping its near-term price action.

JPMorgan's Volatility-Adjusted BTC-to-Gold Model

JPMorgan's model compares Bitcoin's market capitalization to gold's private investment base, which stands at approximately $28.3 trillion. By adjusting for Bitcoin's higher volatility, the bank estimates that Bitcoin's market cap would need to expand by 67% to achieve parity with gold on a risk-adjusted basis. This calculation implies a Bitcoin price of $170,000, a level that is currently $68,000 above its trading range of $91,000 to $95,894 as of November 2025.

The model's logic hinges on the premise that Bitcoin could capture a portion of gold's role as a store of value, particularly as institutional adoption accelerates. For instance, products like the BlackRock iShares Bitcoin Trust ETF are expected to drive demand, further narrowing the gap between Bitcoin's theoretical valuation and its current price. JPMorgan also notes that Bitcoin's production cost-estimated at $94,000-acts as a natural floor, as miners reduce selling pressure when prices approach this level.

Production Cost as a Floor and Structural Stability

Bitcoin's production cost, derived from mining expenses, has historically served as a critical support level. As of 2025, this cost is nearly aligned with Bitcoin's current price, reinforcing the argument that further declines are unlikely in the short term. JPMorgan highlights that this floor is reinforced by structural factors, including the recent deleveraging in crypto derivatives markets, which has reduced forced selling and created a more stable environment for price recovery.

Moreover, the bank's analysis underscores that Bitcoin's risk-adjusted valuation remains compelling. Even if Bitcoin were to capture only two-thirds of gold's private investment base, its market cap would need to reach $6.2 trillion, translating to a price of $170,000. This suggests that Bitcoin's undervaluation is not merely a function of volatility but also a reflection of its underpenetration in the global store-of-value asset class.

Institutional Adoption and the Path to $170K

The convergence of JPMorgan's valuation model and MicroStrategy's strategic holdings points to a broader narrative: Bitcoin's transition from speculative asset to institutional-grade store of value. This shift is being accelerated by products like ETFs, which have streamlined access for institutional investors. As of 2025, inflows into Bitcoin ETFs have already contributed to a 12% increase in Bitcoin's market capitalization, a trend JPMorgan expects to continue.

Critically, the $170,000 target is not a mere extrapolation of bullish sentiment but a function of risk-adjusted metrics and structural demand. If Bitcoin's volatility continues to decline-a trend observed in 2025-its appeal as a substitute for gold will strengthen, further narrowing the gap between its current price and theoretical valuation.

Conclusion

Bitcoin's undervaluation relative to gold, as quantified by JPMorgan's volatility-adjusted model, presents a compelling case for a $170,000 price target. This trajectory is supported by Bitcoin's production cost as a floor, structural deleveraging in derivatives markets, and the stabilizing influence of MicroStrategy's balance sheet. While risks such as forced selling and regulatory uncertainty persist, the alignment of macroeconomic and microeconomic factors suggests that Bitcoin's journey toward parity with gold is not only plausible but increasingly probable.