JPMorgan: Bitcoin is more attractive than gold in the long term

In a newly released report, JPMorgan made a comparison when the price increase of gold is outperforming Bitcoin (BTC) since October of last year. Gold prices are also more volatile, leading to BTC now being “even more attractive than gold over the long term”. The Bitcoin-to-gold volatility ratio has dropped to around 1.5x – a record low – making BTC increasingly attractive on a volatility-adjusted basis, they added.

According to the above analytical framework, Bitcoin’s market capitalization would have to increase by an equivalent price of about 266,000 USD to equal the scale of private sector gold investment, estimated at about 8,000 billion USD, not including the amount of gold held by central banks. However, they emphasized that this is an “unrealistic” target for this year, but only serves to illustrate the long-term upside potential of BTC when negative sentiment reverses and the asset is once again seen as an equally attractive hedge against severe risk scenarios.

JPMorgan is the world’s largest bank in terms of market capitalization. They offered a constructive view on the cryptocurrency market despite the decline since the beginning of the year. The Wall Street investment bank believes that institutional capital flows and greater regulatory clarity could lay the foundation for the next surge in digital assets.

“We have a positive view on the cryptocurrency market in 2026 as we expect capital flows into digital assets to continue to increase, but led more by institutional investors,” the JPMorgan analysis team wrote in a recent report.

This optimistic view comes even though the market has just undergone a sharp correction, pulling BTC below the bank’s estimated production costs. At the time of publishing the report, the world’s largest cryptocurrency was trading around $66,300.

The cryptocurrency market has been under deep correction pressure in recent weeks. Bitcoin at times fell below key breakeven levels related to miners’ mining costs, causing sentiment to weaken and on-chain activity to shrink. On-chain are transactions performed and recorded directly on the blockchain network, such as buying and selling digital currencies, NFT transactions, interacting with smart contracts… However, volatility is still high and interest from institutional investors is said to be more persistent than individual investors, opening up the possibility of recovery if capital flows return to digital assets.

Analysts currently estimate the cost of producing Bitcoin at around $77,000, down significantly in recent weeks. Bitcoin’s production cost is the average cost to mine one BTC, reflecting the amount of money miners have to spend on electricity, machinery, operating infrastructure and related financial costs. Among them, electricity usually accounts for the largest proportion.

This number does not have a fixed level but is estimated by analytical organizations based on network difficulty and total network computing power (hashrate) – two factors that show the level of competition in mining activities. As the difficulty and computing power of the entire network increase, the average cost to mine one Bitcoin also increases. Conversely, if more miners leave the network, costs may decrease. Historically, Bitcoin prices trading below production costs often occurred when miners were under pressure to sell to recoup costs. Therefore, production costs are often considered a “soft floor” for BTC, although not an absolute guarantee.

Historically, prices trading below production costs have often characterized a bear market. In previous bear market cycles, including 2019 and 2022, BTC also traded below its cost of production before gradually converging back to this threshold.

However, at current prices, many miners are still unprofitable. When revenue is lower than operating costs, miners are forced to continue selling their Bitcoin holdings to maintain daily operations, pay energy costs, and repay debt. This process of shaking off miners shows that pressure still persists in the mining industry.

JPMorgan expects capital flows into digital assets to recover in 2026, mainly thanks to institutional investors instead of individual investors or digital asset treasury (DAT). This trend will likely be supported by legal developments in the US, including the possible passage of cryptocurrency-related legislation such as the Clarity Act. This is a US bill aimed at clarifying the legal framework for digital assets, delineating management rights between the US Securities Commission (SEC) and the US Commodity Futures Trading Commission (CFTC), creating transparency and supporting the development of the digital asset market.