Recently, the financial giant JPMorgan, which once had an ambiguous attitude towards Bitcoin and even referred to it as a 'scam' through its CEO, released a macro strategy report that can be described as a 'bombshell.' The core point of the report is astonishing: the fair value of Bitcoin should be $126,000.
It should be noted that today (September 1, 2025), Bitcoin's price hovers around $110,000. JPMorgan's report is akin to publicly declaring that this most well-known cryptocurrency in the world is not only not in a bubble but is actually undervalued, with its market capitalization needing to rise by at least 13% to match gold's value.
This is no longer simply 'bullish'; it is almost a drumroll for the 'value reassessment' of Bitcoin.
Even more intriguingly, JPMorgan's reasoning this time is no longer based on grand narratives about how blockchain technology will change the world, but is grounded in an extremely calm, 'Wall Street' metric—volatility. The report notes that in the first half of 2025, Bitcoin's six-month rolling volatility has plunged from nearly 60% at the beginning of the year to about 30%, a historic low.
Yes, you read that right: a historic low. The Bitcoin that was once labeled as 'wild west' and 'rollercoaster' is quietly undergoing a profound 'character' transformation.
What logic lies behind this? How did JPMorgan derive the astonishing target of $126,000 from what seems to be a dull technical indicator? Behind this is actually a solid trio of pillars that together support a new value narrative.
The significant narrowing of volatility—has drastically reduced the risk cost for institutional investors.
The risk-adjusted benchmark for gold—repricing Bitcoin within the value framework of gold.
The combination of corporate holdings and ETF fund inflows—providing unprecedented solid financial support for prices.
Now, let's break down these three 'pillars' one by one to see how JPMorgan meticulously pieced them together to form the shining target price of $126,000.
The first pillar: The silent revolution of volatility—from 'rollercoaster' to 'cruise ship'.
You might ask, isn't volatility just a number that measures price fluctuations? Is it really that important when it drops from 60% to 30%?
The answer is: extremely important, especially for institutional investors holding hundreds of billions.
In the financial world, volatility does not just represent opportunity; it is more directly equivalent to 'risk.' For pension funds, insurance companies, and large asset management firms that require strict risk budgeting, the higher the volatility of an asset, the more risk capital they need to allocate when holding that asset, and the greater the potential loss exposure.
It's like driving a sports car with faulty brakes; although thrilling, you would never dare to use it as a daily commuting tool.
In the past, Bitcoin's annualized volatility reached as high as 80% or even 100%, making it appear more like a chip in a casino to institutions rather than a serious asset to be included on balance sheets.
But now, the situation has changed.
The six-month rolling volatility mentioned in JPMorgan's report is a scientifically dynamic way to measure risk. We can understand it simply as a 'moving observation window.' Analysts would do this:
Select data: Gather the closing prices of Bitcoin for each day over the past 180 days (approximately six months).
Calculating daily returns: Calculate the rate of change of the price for each day relative to the previous day. Usually, logarithmic returns (ln(today's price/yesterday's price)) are used for more precise measurement.
Calculating standard deviation: Gather the daily returns over the past 180 days and calculate their standard deviation. This value represents the degree of Bitcoin's price volatility over the past six months.
Annualizing: To facilitate comparison with other assets (such as stocks and gold), this daily standard deviation needs to be 'annualized,' usually by multiplying by √252 (there are approximately 252 trading days in a year).
Rolling calculation: The most critical step is 'rolling.' Tomorrow, this 180-day window will move forward by a day, producing the latest volatility data. This way, we can obtain a continuous curve reflecting real-time changes in risk.
When this curve steadily declines from nearly 60% at the beginning of the year to a historic low of 30%, the signal it conveys is revolutionary. It indicates that Bitcoin, once a small boat violently rocking in a storm, is transforming into a cruise ship capable of sailing smoothly in the open sea.
This transformation is not accidental. It reflects a profound shift from technical indicators to funding logic. With the popularization of Bitcoin spot ETFs, a large influx of passive, long-term allocated funds has begun to enter the market.
Meanwhile, more and more listed companies like MicroStrategy and Tesla are making Bitcoin part of their corporate financial reserves.
The entry of this 'smart money' and 'long money' has greatly altered the microstructure of the market. Unlike retail investors who chase highs and cut losses, they provide stable buying and selling, absorbing extreme market emotions like a sponge, thus effectively 'ironing out' price volatility.
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The decrease in volatility, in turn, creates a strong 'gravitational field.' It directly lowers the 'risk cost' for institutions allocating Bitcoin, making it financially and risk-control feasible to incorporate Bitcoin into their global macro investment portfolios. This has formed a positive cycle: institutional entry -> decrease in volatility -> attracting more institutional entry.
This is the first cornerstone of JPMorgan's $126,000 valuation model.
The second pillar: The value benchmark of gold—how does digital gold compare to physical gold?
If the decrease in volatility has paved the way for institutional entry, then JPMorgan's second logic is that it has found a solid 'anchor' for Bitcoin's ultimate value—gold.
For a long time, 'digital gold' was merely a beautiful vision for Bitcoin supporters. But JPMorgan has, for the first time, used rigorous financial models to transform this metaphor into a quantifiable valuation. They adopted a 'volatility-adjusted gold price ratio' model.
The logic of this model is both exquisite and intuitive; we can understand it in several steps:
Establishing the gold benchmark: First, we need to find a comparable gold market size. Here, we are not referring to the total amount of gold globally, but to the gold held by the private sector for investment purposes, including gold bars, coins, and gold ETFs. The total market value of this portion of gold represents the sum of funds allocated by global investors for value storage and inflation hedging. According to market data, this number is approximately $5 trillion (this is a commonly cited estimate across the industry; JPMorgan's specific model values may vary slightly, but the logic is consistent).
Calculate the volatility ratio: Next, compare the 'risk differential' between Bitcoin and gold. As mentioned earlier, Bitcoin's six-month rolling volatility has dropped to about 30%. As a mature safe-haven asset, gold's long-term volatility typically remains around 15%. Therefore, Bitcoin's current volatility is approximately 2 times that of gold (30% / 15%). This figure has changed dramatically compared to several years ago when it was often 4 or even 5 times.
Adjusting for risk: This is the most crucial step. JPMorgan's analysts believe that a rational investor, when allocating between two similar function assets (value storage) with different risks, would require the higher-risk asset to provide an appropriate discount. In other words, before their volatilities are equal, Bitcoin's total market capitalization should not directly equal gold's total market capitalization. The 'fair' relationship between them should be:
The risk-adjusted fair market value of Bitcoin = Total market value of private investments in gold / (Volatility ratio of Bitcoin to gold)
Deriving target price: Now, we substitute the numbers into the formula.
$2.5 trillion = $5 trillion / 2
This means that at the current volatility level twice that of gold, Bitcoin's 'fair' total market capitalization should reach $2.5 trillion.
So, what price corresponds to a market capitalization of $2.5 trillion? By the end of 2025, the total circulating supply of Bitcoin is expected to reach approximately 19.8 million coins.
Target price = $2,500,000,000,000 / 19,800,000 coins ≈ $126,262
Bingo! We have achieved a target price of $126,000 that is almost entirely consistent with JPMorgan's report.
The beauty of this valuation model lies in its ability to transform Bitcoin's value from a purely market sentiment-driven unanchored state into an analytical framework that can logically relate to traditional macro assets. It tells us that the rise in Bitcoin's price is no longer just a victory of 'consensus,' but an inevitable result of its risk attributes converging towards mature assets.
The 13% upside mentioned in the report title is calculated based on Bitcoin's market capitalization of approximately $2.2 trillion at the time of the report's release—moving from $2.2 trillion to $2.5 trillion in fair value is precisely about a 13% distance.
The third pillar: The flood of funds—dual engines of enterprises and ETFs.
No matter how perfect the model is, it requires real-world funds to drive it. This is, in fact, the third and most solid pillar of JPMorgan's bullish logic: a continuous influx of structural funds.
This flood of funds mainly comes from two aspects: strategic allocations from corporate treasuries and the continuous fundraising of spot ETFs. These two forces are forming a powerful 'cumulative effect'.
Firstly, enterprises are 'balance-sheeting' Bitcoin.
According to the report released by Bitwise in July 2025, by the end of the second quarter of 2025, 125 listed companies globally had Bitcoin on their balance sheets, totaling 847,000 coins with a total market value of approximately $91 billion. Even more astonishing, these companies added a record 159,000 coins in the second quarter alone.
This marks a fundamental shift. Corporates view Bitcoin not as a short-term speculation but as a strategic asset superior to cash for long-term value storage and hedging against fiat currency devaluation. Each Bitcoin locked in corporate treasuries reduces the available trading supply in the market, providing solid support for prices.
Secondly, Bitcoin spot ETFs have opened the floodgates to the mainstream.
Since gaining approval in the US in early 2024, the influence of Bitcoin spot ETFs has been thoroughly unleashed in 2025. These ETF products allow any ordinary investor or institution with a securities account to easily allocate Bitcoin like trading stocks, completely eliminating past entry barriers.
Data shows that the inflow of funds is astonishing. In the second quarter of 2025 alone, the US Bitcoin ETF recorded a cumulative net inflow of $14.8 billion, with an average daily inflow of $600 million. The total amount of Bitcoin held by the entire ETF category has exceeded 1.29 million coins, accounting for over 6% of the total Bitcoin supply.
This fund flow driven by ETFs is passive, structural, and continuous. It represents the long-term demand of tens of thousands of individual retirement accounts, wealth management portfolios, and small institutions. This demand creates a huge supply-demand imbalance with Bitcoin's fixed, predictable supply (approximately 3.125 new coins produced every ten minutes), becoming the most direct and powerful engine driving price increases.
The 'locking effect' of corporate holdings and the 'money-absorbing effect' of ETFs are two engines that cause and reinforce each other. Corporate large-scale purchases enhance market confidence and attract more funds into ETFs; the success of ETFs and the deepening of liquidity provide a safer and more compliant environment for corporate allocations.
. This positive feedback loop injects the most realistic momentum into JPMorgan's $126,000 valuation model.
Conclusion: Is $126,000 the endpoint or a new starting point?
Putting these three pillars together, the logical picture painted by JPMorgan becomes crystal clear:
The decrease in risk (volatility falling to historical lows) has given Bitcoin a 'ticket' to enter the mainstream institutional spotlight.
Value reassessment (risk-adjusted model compared to gold) provides a clear and rational valuation 'anchor'.
The surge in demand (structural buying from enterprises and ETFs) provides a continuous source of 'fuel' to achieve this valuation.
Of course, we must remain clear-headed. Any model has its limitations, and JPMorgan itself has previously given vastly different target prices. Macroeconomic headwinds, unexpected regulatory tightening, or technological 'black swan' events remain a sword hanging over all risk assets that could fall at any time.
However, the true significance of this report may not lie in the precision of the specific number of $126,000, but in the trend it reveals: Bitcoin is undergoing a profound 'coming of age' ceremony. It is transforming from a marginalized experiment dominated by geeks and speculators into a mature asset with macro allocation value that is incorporated into the analytical frameworks of top global financial institutions.
From this perspective, $126,000 may well be far from the endpoint. If Bitcoin's volatility can further align with gold, and if corporate and sovereign fund allocations become the norm, then the 'fair value' we are discussing today may merely be a new starting point in the future.
