JPMorgan analysts forecast Bitcoin could reach $266,000 long-term, citing its growing appeal compared to gold amid current market pressures.
JPMorgan analysts predict that Bitcoin could reach a value of $266,000 in the long term, as it becomes increasingly appealing compared to gold. This projection comes amid heightened market pressures and a notable decline in risk assets, especially within the technology sector.
Investor sentiment has recently been dampened by the $29 million hack of the decentralized finance platform Step Finance on the Solana blockchain, further contributing to a downturn in the market. As a result, Bitcoin's price has dipped below its estimated mining cost of approximately $87,000, a level that typically acts as a soft lower boundary.
Should Bitcoin remain below this mining cost for an extended period, analysts warn that unprofitable miners might exit the market, thereby potentially lowering mining costs.
Bitcoin's price has seen a significant decrease from around $73,300 to a recent low of $60,000, marking an 18% decline.
Positive Long-Term Outlook
Despite current market negativity, JPMorgan maintains an optimistic long-term outlook for Bitcoin. The analysts noted that gold's significant outperformance over Bitcoin since last October, combined with rising volatility in gold, has made Bitcoin a more attractive option for investors.
"The volatility ratio of Bitcoin to gold has fallen to approximately 1.5, which is a record low, enhancing Bitcoin's appeal," the analysts stated.
For Bitcoin to match the private investment market in gold, valued at around $8 trillion excluding central bank reserves, its market cap would need to reach $266,000 per coin. While this target is deemed unrealistic for the current year, analysts see potential for growth in the future as market sentiment shifts and Bitcoin becomes a favorable asset for hedging macroeconomic risks.
Last November, projections suggested a rise to $170,000 within 6 to 12 months, based on volatility-adjusted comparisons to gold. The new target is significantly higher and indicates a longer timeframe for realization, coinciding with an increase in the bank's long-term gold forecast to $8,000–$8,500.
Market Dynamics
In spite of the overall market downturn, the volume of liquidations in derivatives markets has been less severe than in previous quarters, with the unwinding of leverage in perpetual futures showing moderation compared to the October wave. Institutional losses on the CME have also decreased.
ETF Trends
Fund flows in exchange-traded funds reflect negative sentiment, with ongoing outflows from spot Bitcoin and Ethereum ETFs signaling weak demand from both retail and institutional investors.
Stablecoin Supply
The stablecoin supply has slightly declined in recent weeks, indicating caution among market participants. However, analysts do not interpret this as a sign of capital flight but rather as a natural response to the reduced overall market capitalization, suggesting that as prices decrease, the ecosystem requires less liquidity.
Despite these dynamics, JPMorgan analysts anticipate a significant influx of capital into the cryptocurrency market in the future.
