Fidelity Digital Asset described Bitcoin (BTC) as a macro asset due to its growing correlation to key macro drivers.
In an article, Chris Kuiper, VP of Research at Fidelity, analyzes BTC’s relationship to liquidity and inflation.
JPMorgan analysts have also highlighted Bitcoin’s attractiveness as an investment, positioning it as undervalued relative to Gold.
Why Bitcoin Fits into a Macro Asset
In the article, Kuiper said Fidelity views Bitcoin as a hedge against macroeconomic trends. Thus, he urged investors to care about Bitcoin specifically as a macro asset.
He explained that a macro asset responds primarily to large-scale economic forces, such as global liquidity, inflation, interest rates, or currency debasement. These assets help investors hedge against or bet on macroeconomic trends.
Kuiper proposes that Bitcoin is emerging as a preeminent global macro asset due to several factors fixed supply and liquidity.
Notably, the Bitcoin protocol caps its total supply at 21 million coins, with halvings reducing issuance over time.
This scarcity contrasts with fiat currencies. Central banks can expand fiat indefinitely, making BTC a potential hedge against money printing and debasement.
Bitcoin also shows a strong correlation with liquidity measures like the U.S. M2. This means BTC Bitcoin surges during periods of high liquidity as excess money flows into alternatives.
On the flip side, BTC underperformed in tighter regimes.
While Bitcoin strongly correlates with forward-looking inflation expectations, its correlation with the Consumer Price Index (CPI) has weakened in recent years. Notably, in 2022, when CPI hit 9%, BTC tested new lows of $20,000.
Kupier added that BTC 24/7 trading and low storage costs further position it as an effective hedge against macroeconomic trends.
The JPMorgan BTC Undervalued Thesis
Meanwhile, banking giant JPMorgan Chase recently described BTC as an undervalued asset relative to Gold.
According to analysis from JPMorgan analysts, Bitcoin’s six-month volatility has declined sharply from 60% to a record low of 30%. Hence, Bitcoin is now only twice as volatile as gold, the narrowest gap ever.
This reduced volatility makes Bitcoin a more stable option for investors compared to its historical profile.
On a volatility-adjusted basis, JPMorgan analysts suggest the BTC market capitalization, currently around $2.2 trillion, is undervalued.
To align with the estimated $5 trillion in private investment allocated to gold, the BTC market cap would need to climb 13%. This increase would push the price per coin to roughly $126,000.
Therefore, JPMorgan noted that BTC is undervalued by approximately $16,000 per Bitcoin.
Analysts link this to rising corporate treasury demand, now holding 6% of supply, mirroring the stabilizing role central banks once played in bond markets.
Large-scale treasury purchases by firms like MicroStrategy and Metaplanet, and inflows into BTC ETFs, fuel this adoption.
Bitcoin Price and Prospects
Currently, BTC is priced at $112,438, a 0.1% increase over the past 24 hours. BTC is showing signs of recovery, considering the price decreased to $111,000 lows in today’s morning trading session.
Also, the price reached an intraday high of $113,364 before falling to the current levels.
The leading cryptocurrency by market cap appears set for a parabolic run, especially with the BTC ETF gaining momentum.
According to Farside Investors’ data, BTC ETFs saw inflows of $81.4 million on August 28. BlackRock’s IBIT came first with inflows reaching $50.9 million.
Analysts have set targets as high as $150,000 and $200,000 for BTC this cycle.
Per technical analysis, the $109,000 to $112,000 range remains a critical support zone for Bitcoin in the short term.
A weekly close above this range could see Bitcoin climbing higher. In contrast, a close below it may accelerate the recent drop.
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