Others fear, I greed! JPMorgan: Bitcoin has a long-term outlook of 266,000, outperforming gold

JPMorgan forecasts Bitcoin reaching $266,000 in the long term, outperforming the safe-haven asset gold. Bitcoin volatility has dropped to a new low of 1.5, and its market cap would need to reach $26.6 trillion to match the private gold investment of $8 trillion. The bank emphasizes that reaching this target price this year is unrealistic, but a reversal of negative sentiment could highlight its potential. Currently, Bitcoin has fallen below $87,000, the production cost, and remains below the level that could force miners to exit in the long term.

Volatility Ratio of 1.5 Sets New Low, Enhancing Bitcoin’s Appeal

JPMorgan analysts state that despite short-term pressures from weak sentiment in the crypto market, Bitcoin’s price could reach $266,000 in the long run because it appears increasingly more attractive than gold. A team led by JPMorgan Managing Director Nikolaos Panigirtzoglou noted in a report on Wednesday that the crypto market has come under pressure again over the past week, driven by broader risk asset weakness (especially tech stocks), while traditional hedges like gold and silver have also experienced significant pullbacks.

Despite short-term pressures, JPMorgan analysts believe that driven by Bitcoin’s evolving role relative to gold, its long-term outlook will strengthen. They stated: “Since October last year, Bitcoin has outperformed gold significantly, coupled with a sharp increase in gold volatility, making Bitcoin more attractive than gold in the long term.” They added that the volatility ratio between Bitcoin and gold has fallen to around 1.5, a new all-time low, making Bitcoin more attractive after volatility adjustments.

This volatility ratio of 1.5 is extremely significant. Historically, Bitcoin’s volatility has been 5 to 10 times that of gold, and such extreme volatility has been a major obstacle for institutional investors to allocate to Bitcoin. However, as Bitcoin’s market matures, liquidity improves, and institutional participation deepens, its volatility is systematically decreasing. When the volatility ratio drops to 1.5, it indicates that Bitcoin’s risk profile is approaching that of gold, but its potential returns remain far higher. This “decreased risk, unchanged return potential” combination is highly valued by institutional investors.

From an asset allocation perspective, a volatility ratio of 1.5 means investors can allocate more to Bitcoin within the same risk budget. Traditional portfolio theory suggests adjusting allocations based on asset volatility, with high-volatility assets typically assigned smaller proportions. But when Bitcoin’s volatility approaches that of gold, investors can apply their usual gold allocation (typically 5-10%) directly to Bitcoin without excessively increasing portfolio risk. This structural shift could trigger large-scale reallocation by institutional funds.

Bitcoin vs Gold: Attraction Comparison

Volatility Ratio: 1.5, a new historic low (previously 5-10 times)

Potential Returns: Bitcoin’s upside far exceeds gold

Institutional Acceptance: Lower volatility reduces allocation barriers

Market Size: Bitcoin at $1.3 trillion vs gold at $8 trillion (private sector), huge growth potential

Market Cap Target of $266,000: Underlying Logic

Analysts point out that, based on this framework, Bitcoin’s market cap would need to rise to a level equivalent to a $266,000 per coin price to match the scale of private sector gold investments (estimated at about $8 trillion, excluding central bank gold holdings). They emphasize that this target is “unrealistic” within this year, but also note that once negative sentiment reverses, Bitcoin will again be seen as an effective hedge against catastrophic risks, highlighting its long-term upside potential.

This market cap comparison is straightforward. Currently, Bitcoin’s market cap is about $1.3 trillion (at $65,000 per BTC), while private gold holdings are roughly $8 trillion. To reach gold’s market cap, Bitcoin would need to increase about 6.15 times, from $65,000 to approximately $400,000. JPMorgan’s target of $266,000 is relatively conservative, representing about 42% of the gold market cap, possibly reflecting analysts’ view that Bitcoin is unlikely to fully replace gold but can capture a significant market share.

In November last year, JPMorgan analysts used volatility-adjusted comparisons between Bitcoin and gold to forecast that over the next 6-12 months, Bitcoin could rise by about $170,000. The new target is significantly higher (up from $170,000 to $266,000), reflecting a longer-term outlook, and aligns with analysts’ recent upward revision of gold’s long-term price target to $8,000–$8,500. If gold rises to $8,500, the private sector gold market would expand to about $9–10 trillion, and Bitcoin reaching 42% of that would correspond to a higher price.

Analysts emphasize that “within this year” is an important time frame. Rising from $65,000 to $266,000 involves about a 309% increase, which is highly unlikely to occur within a year unless triggered by extreme catalysts (such as a global financial crisis, major currency collapses, or Bitcoin being adopted as a reserve asset by multiple countries). A more realistic scenario is that this target will take 5-10 years or longer, during which Bitcoin must continue to build institutional adoption, use cases, and market recognition.

Contradiction Between Short-term Pressure and Long-term Potential

Recent declines have pushed Bitcoin’s price below its estimated production cost, which historically acts as a “price floor.” JPMorgan analysts estimate Bitcoin’s production cost at around $87,000. They added that if prices remain below this level long-term, unprofitable miners may exit, which could further reduce production costs.

According to The Block’s Bitcoin price page, Bitcoin has continued to decline, dropping nearly 10% in the past 24 hours, with a current trading price of about $65,600. This sharp short-term volatility contrasts sharply with the $266,000 long-term target, highlighting the core contradiction in Bitcoin investing: the long-term logic may be correct, but short-term volatility can destroy investor confidence and capital.

Despite the market’s weakness, analysts note that compared to last quarter, the liquidation volume in the crypto derivatives market is relatively small. The perpetual contracts’ leverage ratio, measured by Bitcoin and Ethereum market caps, is much lower than during the liquidation wave last October. Meanwhile, fund flows in spot Bitcoin and Ethereum ETFs continue to reflect widespread negative sentiment, with ongoing outflows.

In recent weeks, stablecoin supply has also decreased, intensifying cautious market sentiment. However, analysts say this decline should not be interpreted as investors completely selling off cryptocurrencies. Instead, this contraction is a “natural and lagging response to the overall shrinking crypto market cap.”