In the long run, the first cryptocurrency could reach $266,000, as it becomes "more attractive than gold," reports The Block, citing JPMorgan analysts.

The report notes that market pressure has intensified over the past week amid a decline in risk assets, particularly in the tech sector. Traditional safe-haven assets like gold and silver also experienced sharp corrections.

Investor confidence took another hit from the hack of the DeFi platform Step Finance on the Solana blockchain, resulting in a loss of $29 million.

The recent correction has pushed Bitcoin's price below its estimated mining cost, which has historically served as a "soft lower boundary." Experts estimate this cost to be around $87,000.

If prices remain below this level for an extended period, unprofitable miners may exit the market, leading to a decrease in mining costs, analysts explained.

The price drop from approximately $73,300 to a local minimum of $60,000 represented a decline of about 18%.

Bitcoin's price drawdowns from its historical peak. Source: Glassnode.

Defying Skeptics

Despite the current negativity, JPMorgan maintains a positive long-term outlook.

"The significant outperformance of gold over Bitcoin since October last year, combined with a sharp increase in the volatility of the precious metal, has made the first cryptocurrency even more attractive compared to gold in the long term," analysts stated.

They emphasized that the volatility ratio of Bitcoin to gold has dropped to about 1.5, a record low, making Bitcoin "increasingly appealing."

Volatility ratios of Bitcoin and gold. Source: JPMorgan, Bloomberg Finance.

Not This Year

According to their model, for Bitcoin to match private investments in gold (around $8 trillion excluding central bank reserves), its market capitalization would need to reach $266,000 per coin.

Analysts deemed this target "unrealistic" for the current year. However, their calculations indicate long-term growth potential after a shift in market sentiment, when the asset will again become an attractive tool for hedging macro risks.

Last November, experts projected a rise to $170,000 within 6–12 months, based on comparisons with the precious metal adjusted for volatility.

The new target is significantly higher but suggests a more distant timeframe. This revision followed an increase in the bank's long-term gold forecast to $8,000–$8,500.

Mixed Signals

Despite the overall market weakness, the volume of liquidations in the derivatives markets was lower than in the previous quarter. The unwinding of leverage in perpetual futures was less severe compared to the October wave.

Institutional losses on the CME also decreased compared to the previous reporting period.

ETFs

Fund flows in exchange-traded funds confirm negative sentiment. The ongoing outflow from spot Bitcoin and Ethereum ETFs indicates weak demand from both retail and institutional investors.

Stablecoins

The supply of stablecoins has slightly decreased in recent weeks, reflecting market participants' caution. However, analysts do not view this as a signal of capital flight.

Experts describe this trend as a natural response to the decline in overall market capitalization. Historically, the volume of stablecoins correlates with the market: as prices drop, the ecosystem requires less liquidity.

It is worth noting that JPMorgan analysts forecasted an influx of large capital into the crypto industry.