Banking giant JPMorgan has projected that Bitcoin (BTC), currently priced around $120,172, could climb to approximately $165,000 on a volatility-adjusted basis relative to gold. This forecast highlights what the bank sees as significant upside potential for Bitcoin if the so-called “debasement trade” continues to gain momentum.

JPMorgan’s models suggest that Bitcoin would need to rise about 40% from current levels to match the scale of private gold holdings once risk is taken into account. At publication time, the world’s largest cryptocurrency was trading around $119,000.

### What Is the Debasement Trade?

The debasement trade involves buying assets such as gold or Bitcoin as a hedge against the devaluation of fiat currencies. JPMorgan’s projection comes as retail investors accelerate their embrace of this strategy, pouring into both Bitcoin and gold exchange-traded funds (ETFs) over the past quarter.

### Surge in ETF Flows

Analysts led by Nikolaos Panigirtzoglou noted that flows into these products have surged since late 2024—a trend that intensified ahead of the U.S. presidential election. The analysts frame the trade as a response to several long-term concerns:

– Persistent inflation pressures
– Ballooning government deficits
– Questions about Federal Reserve independence
– Waning trust in fiat currencies in some emerging markets
– A broader move to diversify away from the U.S. dollar

Cumulative flows into spot Bitcoin and gold ETFs have risen sharply, with retail buyers driving much of the activity.

### Institutional vs. Retail Demand

JPMorgan points out that Bitcoin ETFs initially outpaced gold earlier this year, particularly following Liberation Day. However, gold ETF inflows have been catching up since August, narrowing the gap. According to the bank’s proxy based on open interest, institutions have been net buyers of Bitcoin since 2024, although their momentum has recently lagged behind retail demand.

### Bitcoin’s Relative Appeal to Gold

The steep rise in gold prices over the past month has also bolstered Bitcoin’s relative appeal. The Bitcoin-to-gold volatility ratio has drifted below 2.0, underscoring JPMorgan’s view that Bitcoin remains undervalued compared to gold. According to their model, Bitcoin’s current price is about $50,000 below where it “should” be based on these risk-adjusted metrics.

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In summary, JPMorgan’s analysis highlights significant upside potential for Bitcoin in the current economic environment, driven largely by investor concerns about currency debasement and a growing appetite for hedging alternatives like Bitcoin and gold.
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