Bitcoin Price 'Too Low,' as Volatility Dips, Institutional Interest Rises: JP Morgan

In brief

Bitcoin’s volatility has plunged this year.
Analysts at JP Morgan think this should make the asset more attractive to investors.
The leading cryptocurrency’s price should be at $126,000, they said.

Bitcoin’s price should be higher as its volatility has plunged and the asset has become more attractive asset for institutions, JP Morgan analysts said in a note Thursday.

The analysts said that the price of the leading digital coin should be at $126,000 per coin, although they believe that BTC could still climb that high year-end.

Bitcoin was recently trading at about $111,950, according to CoinGecko data, virtually unmoved over a 24-hour and seven-day period. BTC hit a new all-time high of $124,128 earlier this month.

“The Bitcoin price looks too low compared to gold as Bitcoin volatility reaches historically low levels,” the note authored by Nikolaos Panigirtzoglou read.

The huge price swings characteristic of Bitcoin in previous cycles have become rarer since institutions flooded into the space and spot Bitcoin exchange-traded funds started trading in the U.S. last year.

Analysts have previously told Decrypt that as the asset matures, it’s less likely to experience dramatic drops and surges.

“One of the striking developments this year has been the collapse in Bitcoin [volatility] from close to 60% at the beginning of the year to a historically low level of 30% currently,” the note added.

“We believe a factor behind the collapse in Bitcoin volatility has been the acceleration of Bitcoin purchases by corporate treasuries.”

The report added: “It is thus realistic to expect that the allocations to bitcoin by institutional investors could match those of competing asset classes such as gold if there is convergence in volatilities.”

A number of publicly-traded companies have this year followed Nasdaq-listed Strategy—formerly MicroStrategy—and bought Bitcoin to get better results for shareholders. Strategy (NASDAQ: MSTR) started buying Bitcoin in 2020 and its stock has soared as a result.

The Bitcoin versus gold debate has raged for years since Bitcoin in the past has correlated to the precious metal. Advocates describe the top cryptocurrency as “digital gold.”

But the asset—which debuted in 2009—has also in recent years correlated with U.S. equities, especially tech stocks.