Bitcoin is now less of a wild ride so big investors will get more comfortable buying it, says JPMorgan

JPMorgan strategists note Bitcoin's volatility has significantly decreased from 60% to 30%, reaching a record low relative to gold, which substantially enhances its appeal for institutional investors by reducing portfolio risk. This volatility suppression is partly attributed to corporate treasuries withdrawing Bitcoin into passive holdings. Consequently, JPMorgan believes institutional allocations could eventually match gold, with current analysis suggesting Bitcoin is undervalued by approximately $16,000, implying upside potential to $126,000 to achieve volatility-adjusted parity with gold's private sector investment.

Analysis

A JPMorgan analysis indicates a structural shift in Bitcoin's market profile, making it increasingly attractive to institutional investors. The asset's realized volatility has halved from 60% to approximately 30% since the start of 2025, reaching a record-low differential compared to gold. This volatility suppression is attributed to a significant trend of corporate treasuries, now holding over 6% of the supply in passive strategies, effectively reducing the available trading float. This evolving risk profile is critical for portfolio construction, as lower volatility consumes less risk capital. Based on a volatility-adjusted comparison to gold's $5 trillion in private sector investment, JPMorgan's model suggests Bitcoin is currently undervalued by approximately $16,000. To achieve parity on this risk-adjusted basis, Bitcoin's price would need to appreciate to roughly $126,000, indicating significant upside potential from its current market capitalization of $2.2 trillion.

Key Decisions for Investors

• Consider the reduced volatility of Bitcoin as a key factor strengthening its case for portfolio allocation, potentially as a diversifier or an alternative to gold, given its improved risk profile.
• Monitor the trend of corporate treasury accumulation, as this flow into passive holdings is a primary structural driver suppressing volatility and supporting the asset's fundamental valuation.
• Evaluate the potential for Bitcoin to reach the $126,000 level, which represents JPMorgan's target for parity with gold's private investment on a volatility-adjusted basis, providing a quantifiable long-term upside scenario.
• Given the analysis suggests Bitcoin is currently undervalued by about $16,000 on a risk-adjusted basis, investors may see the current price, which is 10% below recent highs, as a favorable entry point.