Bitcoin’s Price Tumbles 20%: JPMorgan Strategist Says It Now Looks Cheaper Than Gold
Summary
The debate between investing in gold and Bitcoin has been ongoing for quite some time, with both assets vying for the top spot as a store of value during uncertain times. Gold, with its long-standing history and physical scarcity, is often regarded as the ultimate safe-haven asset, providing a tangible hedge against inflation and geopolitical risks. On the other hand, Bitcoin offers a digital evolution of this concept: algorithmically scarce and borderless, with superior portability and transparency. The relationship between gold and Bitcoin remains an intriguing one, particularly in light of recent market fluctuations.
Main Content
Bitcoin Falls Below $100,000 After Sharp October Decline
What’s Driving the Current Outlook for Gold vs Bitcoin?
According to JPMorgan global markets strategist Nikolaos Panigirtzoglou, Bitcoin appears undervalued relative to gold following its severe October decline. As MarketWatch reported on November 6, Panigirtzoglou explained that the drop was mainly fueled by deleveraging in Bitcoin futures, which pushed the price below $100,000 earlier this week – more than 20% off its October 5 all-time high of $126,000.
Investors are closely watching the ratio of open interest in perpetual futures to Bitcoin’s market capitalization as a proxy for leverage in the system. JPMorgan’s analysis suggests that this indicator has now returned to its average level since January 2024, indicating that most of the deleveraging phase has likely concluded. "Following this indicator remains the best guide to Bitcoin’s near-term price trajectory," Panigirtzoglou said.
In addition, while redemptions from spot Bitcoin exchange-traded funds (ETFs) such as BlackRock’s IBIT have occurred, these remain modest compared with earlier inflows. The strategist also noted that gold’s rising volatility after breaching $4,000 per ounce has narrowed the volatility gap between the two assets, with the Bitcoin-to-gold volatility ratio recently falling below 2.0.
What Implications Arise from JPMorgan’s Analysis?
In a presentation released to clients on November 6, Panigirtzoglou provided additional insights into the recent downturn in Bitcoin’s price and its implications for investors. From this information emerges that, "on a volatility-adjusted basis," Bitcoin currently screens cheap relative to gold when taking the two assets’ valuations side by side with a specific consideration given towards their comparative degrees of risk.
As part of his broader argumentation relating these market capitalization figures under examination, Panigirtzoglou then goes on to calculate that in order for each dollar held within the confines Bitcoin, roughly an equivalent 1 dollar would be required if said funds were placed across the board towards gold. This results from comparing the size of their global asset pools: bitcoin being valued at approximately 2.1 Trillion against a backdrop where around 6.2 trillion is invested with gold either in private sector through ETFs or by way of outright metallic holding.
He then goes on, taking into consideration historical prices for both assets at year’s end last December, that while BTC ended at $64k following price drop down from roughly the figure of $100k its peak; gold was instead around $1k higher in dollar amount – thus bringing forth his conclusion.
Panigirtzoglou concluded, "Having been $36,000 too high compared with gold at the end of last year, Bitcoin is now around $68,000 too low."
Gold’s price as reported stands today at $3,981.38 per ounce whereas a decline from opening is shown. Conversely, and on same day Bitcoin price, currently sits at approximately$101,833 down by 1.4% with both continuing overall market-wide volatility seen within each currency.
How Can Investors Balance their Exposure to Gold and Bitcoin?
While the current outlook for gold versus Bitcoin presents opportunities for investors to consider, there are differing opinions as well as various views expressed on best practices for balancing exposure between these two assets. Some argue that a balanced approach, dividing investment dollars evenly between both gold and bitcoin offers superior returns against either option singly.
In fact, incorporating a component of cryptocurrency within asset mix seems now very much in vogue.
Bitcoin’s Price Tumbles 20%: JPMorgan Strategist Says It Now Looks Cheaper Than Gold
Summary
The debate between investing in gold and Bitcoin has been ongoing for quite some time, with both assets vying for the top spot as a store of value during uncertain times. Gold, with its long-standing history and physical scarcity, is often regarded as the ultimate safe-haven asset, providing a tangible hedge against inflation and geopolitical risks. On the other hand, Bitcoin offers a digital evolution of this concept: algorithmically scarce and borderless, with superior portability and transparency. The relationship between gold and Bitcoin remains an intriguing one, particularly in light of recent market fluctuations.
Main Content
Bitcoin Falls Below $100,000 After Sharp October Decline
What’s Driving the Current Outlook for Gold vs Bitcoin?
According to JPMorgan global markets strategist Nikolaos Panigirtzoglou, Bitcoin appears undervalued relative to gold following its severe October decline. As MarketWatch reported on November 6, Panigirtzoglou explained that the drop was mainly fueled by deleveraging in Bitcoin futures, which pushed the price below $100,000 earlier this week – more than 20% off its October 5 all-time high of $126,000.
Investors are closely watching the ratio of open interest in perpetual futures to Bitcoin’s market capitalization as a proxy for leverage in the system. JPMorgan’s analysis suggests that this indicator has now returned to its average level since January 2024, indicating that most of the deleveraging phase has likely concluded. "Following this indicator remains the best guide to Bitcoin’s near-term price trajectory," Panigirtzoglou said.
In addition, while redemptions from spot Bitcoin exchange-traded funds (ETFs) such as BlackRock’s IBIT have occurred, these remain modest compared with earlier inflows. The strategist also noted that gold’s rising volatility after breaching $4,000 per ounce has narrowed the volatility gap between the two assets, with the Bitcoin-to-gold volatility ratio recently falling below 2.0.
What Implications Arise from JPMorgan’s Analysis?
In a presentation released to clients on November 6, Panigirtzoglou provided additional insights into the recent downturn in Bitcoin’s price and its implications for investors. From this information emerges that, "on a volatility-adjusted basis," Bitcoin currently screens cheap relative to gold when taking the two assets’ valuations side by side with a specific consideration given towards their comparative degrees of risk.
As part of his broader argumentation relating these market capitalization figures under examination, Panigirtzoglou then goes on to calculate that in order for each dollar held within the confines Bitcoin, roughly an equivalent 1 dollar would be required if said funds were placed across the board towards gold. This results from comparing the size of their global asset pools: bitcoin being valued at approximately 2.1 Trillion against a backdrop where around 6.2 trillion is invested with gold either in private sector through ETFs or by way of outright metallic holding.
He then goes on, taking into consideration historical prices for both assets at year’s end last December, that while BTC ended at $64k following price drop down from roughly the figure of $100k its peak; gold was instead around $1k higher in dollar amount – thus bringing forth his conclusion.
Panigirtzoglou concluded, "Having been $36,000 too high compared with gold at the end of last year, Bitcoin is now around $68,000 too low."
Gold’s price as reported stands today at $3,981.38 per ounce whereas a decline from opening is shown. Conversely, and on same day Bitcoin price, currently sits at approximately$101,833 down by 1.4% with both continuing overall market-wide volatility seen within each currency.
How Can Investors Balance their Exposure to Gold and Bitcoin?
While the current outlook for gold versus Bitcoin presents opportunities for investors to consider, there are differing opinions as well as various views expressed on best practices for balancing exposure between these two assets. Some argue that a balanced approach, dividing investment dollars evenly between both gold and bitcoin offers superior returns against either option singly.
In fact, incorporating a component of cryptocurrency within asset mix seems now very much in vogue.