JPMorgan's quant desk argues that bitcoin's appeal relative to gold has increased following a phase of notable divergence between the two assets.
In comments attributed to Nikolaos Panigirtzoglou, the bank's quantitative strategist, JPMorgan noted that the strong outperformance of gold versus bitcoin since last October, together with a sharp rise in gold volatility, has altered the relative attractiveness calculation - leaving bitcoin looking "even more attractive compared to gold over the long term."
The bank outlined a series of recent pressures that have weighed on crypto markets. These include broader weakness in risk assets and a correction in gold and silver, which are commonly treated as alternative hedges. The note also flagged a direct hit to sentiment after "Solana's Step Finance suffered a $26mn hack."
Despite that selloff, JPMorgan observed that position liquidations were "more modest compared to those seen last quarter." The bank highlighted deleveraging activity in perpetual futures and trading in CME bitcoin and ethereum contracts as part of that process. At the same time, JP Morgan said spot ETFs "continued to suffer outflows, suggesting that negative sentiment is widespread and encompasses both institutional and retail investors."
Panigirtzoglou also pointed to an ongoing contraction in stablecoins. The strategist described this as a "natural and delayed reaction to the shrinkage of overall crypto market cap," rather than evidence of a large-scale investor exit from the sector.
On valuation and price-floor dynamics, JPMorgan estimated that the recent pullback has pushed bitcoin further below its assessed production cost of $87,000 - a level the bank says has "historically served as a soft price floor." Despite the recent weakness, the bank's central conclusion is that bitcoin's long-term risk-adjusted potential versus gold has improved.
Two measures underpinned that view in the bank's analysis. First, the bitcoin-to-gold volatility ratio has declined to 1.5, which JPMorgan described as "a new record low." Second, on a volatility-adjusted basis, the bank calculated that bitcoin's market capitalization would need to rise to $266,000 "to match private sector's investment in gold."
Context and implications
JPMorgan's note frames the current episode as a complex mix of flow dynamics, security-specific incidents and shifts in relative volatility. The bank separates renewed caution in spot ETFs and the headline shock of the Solana-related hack from what it views as more orderly deleveraging in derivatives markets and a mechanically shrinking stablecoin supply that tracks a smaller crypto market cap.
While the bank points to a lower volatility-adjusted threshold for bitcoin as strengthening its long-term case versus gold, it also emphasizes that market sentiment remains broadly negative across investor types based on ETF flows.
Bottom line
According to JPMorgan's quantitative strategist, recent market moves - including rising gold volatility, concentrated outflows from spot ETFs, a notable crypto hack and continued contraction in stablecoins - have collectively left bitcoin looking more attractive on a risk-adjusted basis relative to gold over the long term. Key metrics cited include a bitcoin-to-gold volatility ratio at 1.5 and an estimated volatility-adjusted bitcoin market cap target of $266,000 to equate private sector investment in gold.