JPMorgan: The current bitcoin price is "undervalued" and could rise to $126,000 by the end of the year

In the world of finance, nothing is more dramatic than seeing a former staunch skeptic personally crown the very object he once despised. When JPMorgan—the financial empire led by Jamie Dimon, who once dismissed Bitcoin as a “fraud”—released a report explicitly pegging Bitcoin’s fair value at $126,000, it went far beyond a simple price prediction. It was more like a storm signal: a “value reassessment storm” for digital assets, originating from the heart of Wall Street, is now unfolding.

The true significance of this report does not lie in the specific number down to the thousands, but in the rigorous valuation framework behind it, entirely based on traditional financial logic. JPMorgan is not talking about faith or the grand narrative of a technological revolution, but is instead redefining Bitcoin’s place on the global financial chessboard using the language they know best—risk, volatility, asset allocation, and relative value. This marks Bitcoin’s evolution from an alternative asset driven by “stories” to a macro asset that can be priced with “models.” At the core of this transformation is the quiet disappearance of Bitcoin’s oldest and most daunting characteristic—volatility.

Taming the “Volatility Beast”: A Ticket to Trillion-Dollar Balance Sheets

For a long time, volatility has been an invisible chasm separating Bitcoin from the trillion-dollar balance sheets of mainstream institutions. For fund managers whose primary task is “capital preservation,” an asset with roller-coaster price swings is an “outlier” that their risk models can hardly tolerate. However, JPMorgan’s analysts have keenly observed that this “volatility beast” is being tamed.

Data shows that Bitcoin’s six-month rolling volatility has been cut in half from a peak of nearly 60% at the beginning of the year to a historic low of about 30%. This decline is not a random market calm, but a manifestation of structural change. It means the risk gap between Bitcoin and gold—the ultimate safe haven in the traditional world—is narrowing at an unprecedented pace. The volatility ratio between the two has dropped to a historic low of 2.0.

Source: Bloomberg Finance L.P., J.P. Morgan Flows & Liquidity

This “2.0” is the key to understanding the entire report. In cold, hard numbers, it tells Wall Street: today, allocating $1 to Bitcoin in your portfolio carries only twice the risk of allocating $1 to gold. In the past, this number could have been five times, or even ten times. The significant reduction in risk is equivalent to granting Bitcoin an official “entry ticket” into mainstream institutional portfolios. Allocating to Bitcoin is shifting from a decision requiring immense courage and a special risk appetite to an option that can be rationally discussed within standard asset allocation models (such as the classic 60/40 portfolio).

“Inverse QE”: How Corporate Treasuries Become Market “Stabilizers”

What force has stabilized Bitcoin’s price volatility? JPMorgan’s report shines a spotlight on a new but extremely powerful market force—corporate treasuries. Led by Michael Saylor of Strategy (formerly MicroStrategy), a movement to convert corporate cash reserves into Bitcoin is quietly unfolding worldwide.

Some Public Companies Holding Bitcoin (Data as of August 2025, for illustration only)

These companies are not buying Bitcoin for short-term speculation, but are treating it as a long-term strategic reserve against currency devaluation. As Saylor puts it: “Bitcoin is the energy of the digital age, the ultimate solution for the balance sheet.” This steadfast “buy and hold” strategy has had a profound impact on the market. The Bitcoin absorbed by corporate treasuries is essentially withdrawn from the active circulation market and enters a “strategic cold storage.”

JPMorgan cleverly likens this process to an “Inverse Quantitative Easing” (Inverse QE). If central banks’ QE injects liquidity into the market to stabilize the traditional financial system, then corporate treasuries are using cash to withdraw scarce hard assets from the market, providing Bitcoin with an unprecedented “ballast.” Each corporate-level purchase adds a layer of concrete to Bitcoin’s price floor, effectively absorbing market selling pressure and systematically reducing its volatility.

Repricing: When “Digital Gold” Meets the Risk Parity Model

With volatility tamed and market structure increasingly solid, JPMorgan can finally activate their valuation models to re-label Bitcoin’s price. They use the “risk parity” logic most familiar to institutional investors, directly benchmarking Bitcoin against gold on a risk-adjusted basis.

The valuation process is clear and compelling: the total global private sector investment in gold is about $5 trillion. Considering Bitcoin’s volatility is twice that of gold, under equal risk weighting, Bitcoin’s reasonable market cap should be half that of gold, or $2.5 trillion. Based on Bitcoin’s current market cap of about $2.2 trillion, to reach this target, its price would need to rise by about 13%, which leads to the fair value of $126,000.

This model sends an extremely important signal: Wall Street has begun to formally recognize Bitcoin’s value storage narrative as “digital gold,” incorporating it into the same analytical framework as gold, bonds, stocks, and other traditional major asset classes.

The success of spot Bitcoin ETFs provides the most direct real-world annotation for this theoretical value reassessment. According to Bespoke Investment Group, Bitcoin funds’ assets under management (AUM) have soared to about $150 billion, just $30 billion short of gold funds’ $180 billion. Led by BlackRock’s IBIT, the amount of capital attracted by Bitcoin ETFs in less than a year is already comparable to that of the gold ETF giant GLD, which has operated for decades. This is not just a simple capital flow, but an unprecedented capital migration across generations and asset classes. It validates, in real monetary terms, JPMorgan’s judgment on institutional adoption and value reassessment in its report.

Conclusion: Is $126,000 the End or a New Beginning?

JPMorgan’s report, like a starting gun, announces the official beginning of the Bitcoin value reassessment race. It tells the world that after fifteen years of wild growth, Bitcoin is completing its “coming of age”—its value is no longer determined solely by community consensus and market sentiment, but increasingly by the rigorous models and vast capital of the world’s top financial institutions.

The decline in volatility, the strategic locking by corporate treasuries, and the massive institutional capital brought by ETFs—these three forces are intertwining to reshape Bitcoin’s DNA, transforming it from a high-risk speculative asset into a strategic asset that can be included in global macro allocations.

Therefore, the $126,000 figure should perhaps not be seen as an ultimate price target. It is more like a “stage anchor” based on the current market structure and risk level. If the wave of corporate adoption continues, if ETF capital inflows maintain momentum, and if Bitcoin achieves further breakthroughs in payment networks and decentralized finance, then the fundamental parameters of the valuation model established by JPMorgan today will themselves change.

As veteran trader Peter Brandt pointed out, a complete reversal in market sentiment may require breaking through key technical levels such as $117,570. But from a broader perspective, when Wall Street begins to systematically reprice it, Bitcoin’s journey from the margins to the center may truly be entering the fast lane.