In a new research note, JPMorgan analysts have argued that Bitcoin's long-term investment case relative to gold has strengthened considerably, even as Bitcoin suffers one of the most severe market pullbacks in its history. The bank's analysis centers on the evolving risk-adjusted profiles of the two assets. Over the past year, gold has surged roughly a third since October 2025, driven by central bank purchases and renewed safe-haven demand. However, that rally has come with a notable increase in gold's volatility, narrowing the perceived risk gap between the metal and Bitcoin.
Bitcoin, on the other hand, has fallen nearly 50% from its peak above $126,000, dipping to as low as $65,000 during a volatile trading session. The downturn marks four consecutive months of declines — a stretch not seen since before the pandemic. Despite this, JPMorgan global markets strategist Nikolaos Panigirtzoglou highlighted that Bitcoin's volatility relative to gold has dropped to a record low. The bitcoin-to-gold volatility ratio has drifted toward 1.5, meaning Bitcoin is now only 50% more volatile than gold, compared to historically much wider spreads.
Volatility Convergence and Valuation Potential
According to Panigirtzoglou, on a volatility-adjusted basis, Bitcoin's market capitalization would need to rise dramatically — theoretically implying a price near $266,000 — to match private sector investment levels in gold. While he acknowledges that such a target is unrealistic in the near term, the comparison underscores what JPMorgan views as significant upside potential over the long run once negative sentiment fades. The report suggests that if Bitcoin's volatility continues to decline relative to gold, its investment case becomes increasingly compelling for institutional portfolios.
The analysts also noted that Bitcoin's current sell-off has been relatively orderly in terms of liquidation activity compared to past crashes. However, U.S.-listed spot Bitcoin ETFs are experiencing persistent outflows. Data from the report shows that in the past three months, outflows have totaled over $12 billion: approximately $7 billion in November, $2 billion in December, and more than $3 billion in June. This suggests that retail and institutional investors are reducing exposure amid the downturn, though not with the panic seen in previous market stress events.
Bitcoin Currently Crashing and Production Cost Support
On the day of the report's release, Bitcoin's price crashed sharply, dipping to $65,000 in volatile trading — marking what appears to be the largest absolute dollar drawdown on record. From its October highs, BTC has retraced roughly $62,000, eclipsing prior nominal declines seen in 2018 and 2022, according to Bitcoin Magazine Pro data. At the time of writing, BTC is trading near $66,000.
JPMorgan also pointed out that Bitcoin is now trading well below its estimated production cost of $87,000 — historically seen as a soft floor. Analysts noted that sustained prices under production cost could force inefficient miners out, eventually lowering the network's marginal cost base. This could create a natural bottom for the market, as less efficient miners shut down and the remaining miners operate at lower costs. The bank does not anticipate a prolonged Bitcoin downturn, given the relatively modest liquidation activity and the potential for miner capitulation to stabilize prices.