Following a sharp 42-day correction from its All-Time High of $126,200, Bitcoin saw multiple major liquidation events, most notably on October 10.
Amidst this volatile sentiment, JPMorgan strategists now say that Bitcoin shows “very limited” downside risk, setting BTC’s price floor at a newly calculated $94,000. The analysts, led by Managing Director Nikolaos Panigirtzoglou, built their analysis on a reliable measure: the asset’s rising cost of production.
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Bitcoin has seen a 42-day correction since its ATH. – Source: TradingView
Rising Mining Cost Shows $94K Floor
JPMorgan’s team views the estimated cost to make one Bitcoin through mining as a key indicator, historically working as a support price for the digital asset. In their latest note, the analysts showed that this production cost recently climbed to roughly $94,000, up from a prior estimate of $92,000.
The steep rise in Bitcoin network difficulty sharply pushed up the estimated production costs. Since the ratio of Bitcoin’s market price to its production cost currently rests near the low end of its historical range, the analysts claim that limited downside exists from current levels. They said that the $94,000 production cost effectively suggests a strong floor beneath the current market price.
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Gold Parity Model Hints At $170K Target
While the production cost holds the floor, the analysts turn to gold to set the potential ceiling. They repeated their upside projection of $170,000 using a volatility-adjusted comparison between Bitcoin and private-sector gold investments through ETFs, bars, and coins.
JPMorgan’s model finds that Bitcoin currently uses about 1.8 times more risk capital than gold because of its higher price volatility. To reach risk-parity with the approximately $6.2 trillion worth of private gold investment, Bitcoin’s market capitalization needs substantial growth.
The analysts worked out that Bitcoin’s market cap, which they set around $2.1 trillion at the time, must grow by about 67%. This required increase shows a theoretical Bitcoin price near $170,000. In other words, the bank views $170,000 as the price Bitcoin must hit if investors view it with the same confidence as they view physical gold.
Timeline Shift
It is important to note that the firm changed its expected timeline for hitting this peak target. Earlier analyses showed an upside toward $165,000 by year-end.
However, seeing the recent market volatility and the resulting negative sentiment, Panigirtzoglou admitted that reaching the high price target by year-end felt impossible. Therefore, the analysts pushed out the projection horizon to a more measured 6 – 12 months, letting the market take in capital and prove the gold-parity model.
JPMorgan has changed its timeline for the target.
While Bitcoin currently trades around the critical $94,000 floor, JPMorgan’s analysis confirms the market a clear picture: a solid, cost-based floor shields investors from deep losses, while the gold-parity comparison still keeps the $170,000 upside intact.
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