Bitcoin may have room to advance to around $170,000 over the next six to 12 months if current market conditions hold, according to new analysis from JPMorgan led by managing director Nikolaos Panigirtzoglou. 

The bank’s latest outlook argues that the recent correction, which saw Bitcoin fall nearly 20 percent from its recent peak, was accompanied by a meaningful reset in leverage across derivatives markets.

JPMorgan analysts pointed to the liquidation wave on October 10, describing it as the largest on record for Bitcoin perpetual futures. A second round of forced unwinding followed on November 3, coming shortly after the more than $120 million exploit of the Balancer protocol. The back-to-back events, they said, shook investor confidence but also cleared out leveraged positions that had been building through early October.

In the report, the team wrote that:

“Overall, we believe that perpetual futures are the most important instruments to watch in the current juncture, and the message from the recent stabilization is that deleveraging in perpetual futures is likely behind us.”

They added that the ratio of open interest in Bitcoin perpetuals to market capitalization has now retreated to levels consistent with longer-term averages.

Ethereum is showing similar patterns says banking giant

The analysts noted that Ethereum markets show similar patterns, although they observed that “in CME futures, the opposite is true; there have been more liquidations in Ethereum than Bitcoin futures.” Meanwhile, recent redemptions in crypto exchange traded funds were described as modest when compared with inflows recorded earlier in October.

JPMorgan’s upside framework centers on Bitcoin’s relative volatility to gold. The report notes that Bitcoin’s volatility ratio versus gold has slipped below 2.0, indicating that Bitcoin currently requires around 1.8 times more risk capital.

Based on historical allocation behavior across private gold holdings, the analysts wrote that Bitcoin’s market capitalization would need to rise by approximately 67% to align with gold’s private investment footprint. As they put it, this “implies a theoretical bitcoin price of close to $170,000.”