JPMorgan asserts that the price of Bitcoin is undervalued relative to gold.

Bitcoin's volatility has taken a significant dip, reaching a record low of about 30%, according to recent data. This decrease in volatility has caught the attention of JPMorgan, who believe that the cryptocurrency is undervalued compared to gold.

Nikolaos Panigirtzoglou, a strategist at JPMorgan, has expressed his view that Bitcoin's fair market value should be around $126,000 in 2021. This estimate is based on the comparison of Bitcoin's pattern of corporate accumulation to the way central banks reduced swings in bond markets after the 2008 crisis.

JPMorgan links the fall in Bitcoin's volatility to a sharp increase in purchases by corporate treasuries. This trend, coupled with the current market level of Bitcoin at $112k, according to CoinMarketCap, suggests that Bitcoin is undervalued when compared to gold's $5 trillion worth of private investment. On a volatility-adjusted basis, Bitcoin's market value would need to rise by about 13% to be in line with gold.

The decrease in Bitcoin's volatility has made it more appealing for investors, especially for those building large portfolios. This is the lowest volatility ever recorded for Bitcoin.

Competition among firms to accumulate Bitcoin is on the rise. Notable examples include Nasdaq-listed KindlyMD, who plans to raise up to $5 billion after buying $679 million worth of Bitcoin. Meanwhile, Adam Back's company, Twenty One Capital, is working to challenge Marathon Digital's position as the second-largest corporate holder of Bitcoin.

This shift in the market is also reflected in the financial sector. Companies now hold more than 6% of Bitcoin's total supply. Strategy, previously called MicroStrategy, was included in major benchmarks, while Japanese firm Metaplanet was recently upgraded into FTSE Russell's mid-cap category, leading to its inclusion in the FTSE All-World Index.

These changes are helping Bitcoin look undervalued compared with gold, according to JPMorgan. The gap between the volatility of Bitcoin and gold has narrowed, with Bitcoin now only twice as volatile as gold, marking the smallest gap ever seen between the two.

In conclusion, JPMorgan's analysis suggests that Bitcoin's fair value is significantly higher than its current market price. If these trends continue, the bank's report suggests more growth could come for Bitcoin, with Panigirtzoglou predicting that this upside is expected to be reached by year end.