Institutions buying Bitcoin more than gold as inflation re-emerges : JPMorgan
According to the latest news, Bitcoin has been leading a 35 per cent rally this week and is soaring far ahead of its $50,000 resistance level. Through this feat, Bitcoin has been able to restore $1-trillion market capitalization to the asset.
JPMorgan has reportedly shared a note with its clients on October 7 that the recent price surge in Bitcoins has been predominantly due to institutional investors looking for a hedge to inflation.
The bank analysts said that the “re-emergence of inflation concerns” has come across investors who are showing renewed interest in Bitcoin usage as an inflation hedge. They further argued that there had been a significant shift in perception of the merits of BTC in relation to gold.
However, institutions are not the only ones to think so. Shark Tank’s star Kevin O’Leary had also stated earlier this week that cryptocurrencies now account for a larger allocation in comparison to gold in his portfolio.
The sudden momentum toward Bitcoin has been in contrast with a recent JPMorgan report that had shown big investors were switching out of Bitcoin into traditional gold.
JPMorgan analysts further cited two other factors they believe are responsible for the current rally, namely, the recent assurances given by US policymakers that they have no intention to follow China’s steps of cracking down on digital currencies and crypto mining. The second factor they mentioned was the recent rise of Lightning Network and 2nd layer payments solutions that have been highly acceptable “fueled by El Salvador’s Bitcoin adoption.”
JPMorgan has not cited any speculations around the imminent approval of Bitcoin derivatives and futures as a significant driver of the price. While writing this piece, Bitcoin was trading at $53,884.76.
Although some divisions of JPMorgan are expressing growing interest in crypto assets and blockchain initiatives, its CEO Jamie Dimon has clarified in an interview that he is a “sceptic of BTC”. Dimon even compared Bitcoins to “a little bit of fool’s gold.”
