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Bitcoin Is Unlikely to Match Gold’s Allocation in Investors’ Portfolios in Nominal Terms: JPMorgan
The bitcoin spot ETF market could grow to around $62 billion in the next two to three years, the report said.
Updated Mar 8, 2024, 11:51 p.m. Published Mar 8, 2024, 10:58 a.m.
- Bitcoin is 3.7 times more volatile than gold.
- If the crypto were to match gold in risk capital terms it implies a price of $45,000.
- The net inflow into spot bitcoin ETFs is about $9 billion.
If bitcoin were to match gold’s allocation in investor portfolios, its market cap should rise to $3.3 trillion, implying a more than doubling of its price, but that probably won't happen because of the cryptocurrency's risk and heightened volatility, JPMorgan (JPM) said in a research report.
Gold is the best comparison for the cryptocurrency given investor perception of bitcoin as a digital version of the metal, the report said.
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“Most investors take risk and volatility into account when they allocate across asset classes and given the volatility in bitcoin is around 3.7 times the volatility of gold it would be unrealistic to expect bitcoin to match gold within investors’ portfolios in notional amounts,” analysts led by Nikolaos Panigirtzoglou wrote.
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JPMorgan said that if bitcoin were to match gold in “risk capital terms” the implied allocation drops to $0.9 trillion, implying a price of $45,000, notably lower than its current level of around $67,400.
“At $66K currently, the implied allocation to bitcoin within investor’s portfolios has already surpassed that of gold in volatility adjusted terms,” the authors wrote on Thursday.
Applying the volatility ratio of 3.7 to estimate the potential magnitude of the bitcoin ETF market implies a size of around $62 billion, the bank said. Net inflow into spot bitcoin ETFs is about $9 billion, some of which could have been a rotational shift from existing products.
“This is a realistic target of the potential size of spot bitcoin ETFs over time perhaps within a time period of two to three years, though much of the implied net inflow could represent a continued rotational shift from existing instruments and venues to ETFs,” the report added.
Read more: Bitcoin Could Slide to $42K After Halving Hype Subsides, JPMorgan Says
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CoinDesk Data's monthly Exchange Review captures the key developments within the cryptocurrency exchange market. The report includes analyses that relate to exchange volumes, crypto derivatives trading, market segmentation by fees, fiat trading, and more.
What to know:
Trading activity softened in March as market uncertainty grew amid escalating tariff tensions between the U.S. and global trading partners. Centralized exchanges recorded their lowest combined trading volume since October, declining 6.24% to $6.79tn. This marked the third consecutive monthly decline across both market segments, with spot trading volume falling 14.1% to $1.98tn and derivatives trading slipping 2.56% to $4.81tn.
- Trading Volumes Decline for Third Consecutive Month: Combined spot and derivatives trading volume on centralized exchanges fell by 6.24% to $6.79tn in March 2025, reaching the lowest level since October. Both spot and derivatives markets recorded their third consecutive monthly decline, falling 14.1% and 2.56% to $1.98tn and $4.81tn respectively.
- Institutional Crypto Trading Volume on CME Falls 23.5%: In March, total derivatives trading volume on the CME exchange fell by 23.5% to $175bn, the lowest monthly volume since October 2024. CME's market share among derivatives exchanges dropped from 4.63% to 3.64%, suggesting declining institutional interest amid current macroeconomic conditions.
- Bybit Spot Market Share Slides in March: Spot trading volume on Bybit fell by 52.1% to $81.1bn in March, coinciding with decreased trading activity following the hack of the exchange's cold wallets in February. Bybit's spot market share dropped from 7.35% to 4.10%, its lowest since July 2023.
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