According to JPMorgan, this week’s rally has been driven by institutional investors who hedge against inflation with Bitcoin. Bitcoin (BTC) led this week’s 35% rally, climbing well above the $50,000 resistance and surpassing the $1 trillion market cap. Investors prefer cryptocurrencies over gold, according to a JPMorgan note…
Why is gold abandoned?
According to a note shared with clients on Thursday by JPMorgan, the recent rise in BTC price was predominantly attributed to institutional investors seeking hedging from inflation. Arguing that there is a change in perception regarding the values of BTC regarding gold, analysts said:
The resurgence of inflation concerns among investors has rekindled interest in using Bitcoin as a hedge against inflation. Institutional investors seem to be returning to Bitcoin, perhaps seeing it as a better inflation hedge than gold.
Not just institutions!
cryptocoin.com Shark Tank star Kevin O’Leary stated earlier this week that crypto has taken a bigger share of his portfolio than gold. Now, the growing momentum for Bitcoin says otherwise, according to a JPMorgan report from May, in which analysts noted that major investors at the time were moving from Bitcoin to traditional gold. MicroStrategy CEO Michael Saylor had this to say in his October 7 tweet:
The implicit endorsement of Bitcoin by major banks and regulators will accelerate the collapse of gold and the rise of Bitcoin as the safe-haven store of value for institutional and individual investors alike.
JPMorgan lists two factors for Bitcoin rally
JPMorgan provided two more factors that it believes are behind the current rally. “Recent assurances by US policymakers that China has no intention of following steps to ban the use or mining of cryptocurrencies,” the analysts wrote in the note. This first factor says that the Chinese bans have not been adopted by the US. With the growing sense of confidence, a demand zone has formed in the Bitcoin price. Analysts also thought the other factor was real use cases:
The recent rise of the Lightning Network and tier 2 payment solutions has helped El Salvador adopt Bitcoin.
Unlike other analysts this week, JPMorgan has not cited speculation that the Bitcoin futures exchange-traded fund will be approved anytime soon as a key driver of price. According to CoinMarketCap, BTC is trading at $55,202.17 at the time of writing. Despite some parts of JPMorgan expressing a growing interest in cryptocurrencies and blockchain startups, CEO Jamie Dimon said in an interview on Monday that he was skeptical of BTC, even comparing it to “some dumb gold.”
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