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Bitcoin (CRYPTO: BTC) could rise to $170,000 within 6 to 12 months, according to JPMorgan Chase & Co. (NYSE:JPM) analysts.
In a note released Wednesday, JPMorgan said the crypto market has corrected about 20% from recent highs, with the Oct. 10 liquidation resetting leverage: "The deleveraging in perpetual futures now appears largely over," the report notes.
The ratio of open interest in Bitcoin perpetual futures to market capitalization has normalized, noting that Ethereum futures showed similar but less severe trends.
The team pointed out that ETF redemptions in recent weeks were modest compared to strong inflows earlier in October.
The analysts added that concerns around the $120 million Balancer exploit briefly weighed on sentiment but did not cause lasting structural stress.
Bitcoin's recovery from that sell-off supports their view that leverage-driven weakness has subsided.
JPMorgan bases its $170,000 target on Bitcoin's relative volatility to gold: The Bitcoin-to-gold volatility ratio has dropped below 2.0, showing bitcoin now consumes 1.8 times more risk capital than gold.
To match private-sector gold investment of about $6.2 trillion, Bitcoin's $2.1 trillion market cap must rise about 67%, the bank said.
That implies a "mechanical" fair value of around $170,000 per coin.
The bank said the correction improved bitcoin's long-term setup, with volatility-adjusted returns looking more favorable.
"Bitcoin appears undervalued relative to gold," the report states.
Bitcoin last traded near $103,000, up about 0.2% in the past 24 hours, according to market data.
The analysts maintained their view that the next six months could mark a strong recovery phase for the cryptocurrency market.
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