The price of bitcoin could rise to as much as $170,000 (around CZK 4 million) within the next six to twelve months, according to analysts at U.S. investment bank JPMorgan. They believe the crypto market is stabilizing after a turbulent autumn and regaining strength.

Crypto market recovers after historic sell-offs

According to a report published on Wednesday, the crypto market has dropped by about 20% from its recent highs. The biggest shock came on October 10, when record liquidations of “perpetual futures” occurred – bets on the future price of bitcoin, which, unlike standard futures, automatically renew.

These financial instruments are popular among speculators betting on bitcoin’s price movements. When the market shifts too sharply, traders lose their margin and exchanges automatically close their positions. That’s exactly what happened in October, on a record scale.

Another, smaller sell-off came on November 3 after an attack on the crypto service Balancer, in which hackers stole more than $120 million. The event reignited questions about the safety of decentralized finance (DeFi) – systems operating without a central bank or intermediary.

The “deleveraging” phase is over

Despite these shocks, JPMorgan analysts claim the worst is over. The ratio of open interest – outstanding bets on future price movements – to bitcoin’s total value has returned to normal levels. A similar trend is visible in ethereum, the second-largest cryptocurrency, though its swings have been less extreme.

“We believe the phase in which the market was shedding excess leverage and risky positions is now over,” the analysts said. In other words, the market has cleaned up and can grow at a steadier pace.

Gold loses its shine as bitcoin benefits from its volatility

Another factor that could support bitcoin’s rise is increased volatility in gold. Gold prices have been swinging more sharply in recent months, making bitcoin a more appealing alternative for some investors.

According to JPMorgan, bitcoin now absorbs roughly 1.8 times more risk capital than gold – less than before. To match gold’s weight in private investors’ portfolios (estimated at $6.2 trillion), bitcoin’s total market capitalization would need to grow by about 67%, reaching around $170,000 per coin.

The path back to growth

Currently, bitcoin trades around $103,000, about $68,000 below what JPMorgan considers its “fair value” compared to gold.

It’s not the bank’s first optimistic forecast. In October, JPMorgan predicted bitcoin could reach $165,000 by year-end, and earlier in the summer it projected $126,000. Bitcoin indeed hit that level on October 6, reaching a new all-time high of over $126,200 before record sell-offs hit the market.

Sources:

https://bitcoinmagazine.com/news/bitcoin-cheap-to-gold-jp-morgan

https://www.theblock.co/post/377891/jpmorgan-bitcoin-price-170000-next-6-12-months

https://cointelegraph.com/news/btc-undervalued-gold-implying-170k-jp-morgan