According to JPMorgan, the perception that Bitcoin is a better inflation hedge than gold is the main reason that triggered the cryptocurrency’s recent run. The banking giant thinks the launch of the first US Bitcoin-linked exchange-traded fund has overstated its role in the recent rally. Details are here.
Bitcoin reached a new ATH of around $67,000 on Wednesday, a day after the record-breaking launch of the ProShares Bitcoin Strategy ETF (BITO). JPMorgan’s strategists noticed that the initial trade boosted investor sentiment and the coin’s price, but they downplayed its impact.
Analysts wrote in a note Wednesday, “While we acknowledge that Bitcoin momentum has been rising steeply since late September, we are not convinced that the anticipation of BITO launch is the main reason. We believe that the fact that Bitcoin offers better protection against inflation than gold is the main reason for the current rise that has triggered the switch from gold ETFs to Bitcoin funds since September.” used the phrases.
According to the JPMorgan team led by Nikolaos Panigirtzoglou, investors are more concerned about rising prices, which is stimulating interest in inflation hedges, including the use of Bitcoin as a hedge.
Constraints caused by problematic supply chains and an energy crisis have pushed prices up sharply around the world. Investors, too, have sought a place to put their cash, which is less exposed to higher prices. Analysts said that this thought led to the transition from gold to Bitcoin. They noted that this flow, which was “very heavy” in the last quarter of 2020 and the beginning of 2021, has accelerated in recent weeks. It is also thought that this exchange should remain intact and support the bullish outlook for Bitcoin until the end of the year.
The team stated that the bulls see the ProShares Bitcoin ETF as a new investment vehicle that attracts investment to the market. However, JPMorgan does not believe that the launch of ProShares will trigger a new wave of fresh capital for Bitcoin, given that investors already have several options linked to the cryptocurrency. Analysts highlighted the drop in interest following the launch of the Purpose Bitcoin ETF (BTCC) in Canada last February. If this is a guide, they said, “The initial excitement about BITO may fade after a week.”
JPMorgan seems to reiterate its stance earlier this month that institutional investors prefer Bitcoin as a hedging tool over gold.
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