Bitcoin's Undervaluation Relative to Gold: A Risk-Adjusted Fair Value Case for $170,000

In a bold reevaluation of Bitcoin's market positioning, JPMorgan has set a 2025 price target of $170,000 for Bitcoin, anchored in a risk-adjusted fair value model that compares the cryptocurrency to gold. The firm argues that Bitcoin is currently undervalued relative to gold, requiring a two-thirds increase in market capitalization to align with the $6.2 trillion in private investment in gold. This would translate to a Bitcoin price of $170,000, up from its current level of approximately $102,000, according to a Coindesk analysis. The analysis hinges on the premise that Bitcoin demands 1.8 times more risk capital than gold, a metric that JPMorgan views as a mispricing opportunity, as noted in a Blockonomi report.

Volatility Convergence: A Maturing Asset Class

A critical underpinning of this argument is the narrowing volatility gap between Bitcoin and gold. In 2025, both assets have stabilized at a three-month volatility of 0.2, a level historically associated with gold but previously absent for Bitcoin, according to a Futunn article. This convergence reflects the maturation of Bitcoin as an asset class, driven by reduced speculative trading and increased institutional adoption. For context, Bitcoin's volatility has historically exceeded 0.8 during major selloffs, but its alignment with gold's low-volatility range signals a shift toward stability, as reported by a Coinotag piece.

Perpetual Futures Stabilization: A Catalyst for Renewed Bullish Momentum

The stabilization of Bitcoin's perpetual futures market further strengthens the case for a price rebound. Open interest has returned to normal levels, and traders have reduced excess leverage, creating a healthier environment for buying activity, according to a Blockonomi report. This marks a departure from earlier 2025, when selling pressure dominated the market. JPMorgan's analysts suggest that the worst of the selloffs is behind us, with favorable conditions now in place for renewed upside, as noted in a Coindesk analysis.

Investor Behavior Shifts: From Gold to Bitcoin and Equities

Investor behavior in 2025 has also demonstrated a notable shift in the relationship between gold and Bitcoin. While gold surged nearly 60% year-to-date-its strongest rally since 1979-Bitcoin's returns have moderated as the market matures, according to a Coinotag piece. However, this does not negate Bitcoin's strategic value. Capital has increasingly flowed from gold into equities and digital assets, driven by the S&P 500's record highs and improving market liquidity, as reported in a Futunn article. This reallocation underscores a broader trend: investors are balancing exposure between traditional safe-haven assets like gold and risk-on digital assets like Bitcoin, as noted in a Futunn article.

The Strategic Case for Bitcoin as a Superior Hedge

Despite gold's traditional role as a hedge, Bitcoin's volatility convergence and institutional adoption position it as a more dynamic alternative. Gold's recent 9% decline from its peak highlights its vulnerability to capital rotation, whereas Bitcoin's alignment with gold's volatility range suggests it can serve as a stable store of value without sacrificing growth potential, as noted in a Coinotag piece. Moreover, Bitcoin's integration into corporate balance sheets-exemplified by firms like MicroStrategy-reinforces its legitimacy as a strategic asset, as reported in a Bitget news report.

Conclusion: A Structural Bull Case

JPMorgan's $170,000 price target is not merely a speculative projection but a structural analysis rooted in risk-adjusted fair value modeling. The convergence of Bitcoin's volatility with gold, the stabilization of perpetual futures markets, and the shift in investor behavior all point to a revaluation of Bitcoin's role in global portfolios. While short-term bearish pressures persist-evidenced by Galaxy Digital's revised $120,000 target-long-term fundamentals remain intact, according to a Cryptopolitan article. For investors seeking a superior hedge in an era of macroeconomic uncertainty, Bitcoin's maturation as a stable, high-utility asset offers a compelling case.