JPMorgan strategist Nikolaos Panigirtzoglou said that Bitcoin’s steep decline in October was triggered by heavy deleveraging in futures markets.
JPMorgan reportedly stated on Thursday that Bitcoin (BTC) appears to be undervalued compared to gold following the record liquidation event in October.
The firm, as cited by The Block, estimated that Bitcoin’s price could reach as high as $170,000 in the next six to 12 months, as leverage in the market resets and its relative stability improves compared to gold.
October Crash Driven By Futures Deleveraging
JPMorgan strategist Nikolaos Panigirtzoglou said that Bitcoin’s steep decline of over 20% in October, after hitting $126,000, was triggered by heavy deleveraging in futures markets.
The sharpest drop occurred on October 10, amid the largest-ever liquidations in perpetual futures, followed by additional smaller liquidations on November 3. He said the latter was linked to fallout from a $128 million Balancer exploit in the decentralized finance sector, which reignited concerns over protocol security.
Futures Unwinding Mostly Complete
Panigirtzoglou noted that most of the futures unwinding is likely behind the market, suggesting a more stable near-term outlook for Bitcoin. He said that as leverage returns to normal levels, Bitcoin now appears undervalued relative to gold on a volatility-adjusted basis.
“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,” JPMorgan wrote in its note.
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