Although gold has recently pulled back, it experienced a significant surge last week. However, Bitcoin failed to keep pace with the gold rally, joining the gold decline and falling below $70,000.
This divergence further fueled the Bitcoin vs. gold debate, but banking giant JPMorgan put an end to the discussion.
Accordingly, JPMorgan stated in its latest report that Bitcoin is a more attractive long-term investment vehicle than gold.
According to Walter Bloomberg, JPMorgan global markets strategist Nikolaos Panigirtzoglou said that following the sharp rise in gold prices, Bitcoin has become more attractive than gold in the long term.
“Gold’s significant outperform against Bitcoin since last October, coupled with the sharp increase in gold volatility, has made Bitcoin even more attractive than gold in the long term.”
JPMorgan noted that with the recent drop, Bitcoin has fallen well below its historically significant cost-of-production level of $87,000, which has served as a critical support level. This represents a historically relatively low.
The bank also highlighted that Bitcoin’s volatility relative to gold has fallen to an all-time low, pointing to increased stability and greater long-term bullish potential for BTC.
At this point, analyst Panigirtzoglou noted that recent price movements have pushed the Bitcoin-gold volatility ratio to a record low of 1.5, indicating that Bitcoin is undervalued.
At this point, JPMorgan argued that, on a volatility-adjusted basis, bitcoin’s market capitalization would need to rise to $266,000 to match the private sector’s investment in gold (approximately $8 trillion excluding central banks).
However, analyst Nikolaos Panigirtzoglou acknowledged that this price is an unrealistic target for this year.
However, he analyzed that the target is logical and Bitcoin has the potential to reach that target when the current negative sentiment dissipates and Bitcoin is perceived as equally attractive as gold as a potential hedge against a doomsday scenario.
*This is not investment advice.
