Bitcoin (BTC) has rallied up 35% this week, surpassing the $50,000 resistance level and reinstituting the asset to a $1 trillion market capitalization.
According to a note imparted by JPMorgan on Thursday with clients, the current boost in price for Bitcoin was mainly accredited to institutional investors looking to hedge on inflation.
“The re-emergence of inflation concerns amongst investors has renewed interest in the usage of BTC as an inflation hedge.”
JPMorgan researchers speculate there has been a change in perception regarding the benefits of Bitcoin with gold.
“Institutional investors seem to be returning to BTC perhaps seeing it as a better inflation hedge than gold.”
For example, Shark Tank star Kevin O’Leary recently specified that crypto accounts for a more extensive appropriation of his portfolio than gold.
The current momentum towards BTC is contrary to last May when JPMorgan experts reported that investors were switching from Bitcoin to standard gold.
The implicit endorsement of Bitcoin by major banks and regulators is going to accelerate the collapse of #Gold and the rise of #Bitcoin as the preferred safe-haven store of value for both institutional and retail investors.https://t.co/7os1ojenHs
— Michael Saylor⚡️ (@michael_saylor) October 7, 2021
JPMorgan suggested two other variables responsible for the current rally:
“The recent assurances by US policymakers that there is no intention to follow China’s steps towards banning the usage or mining of cryptocurrencies.”
“The current rise of the Lightning Network and second layer payments solutions helped by El Salvador’s Bitcoin adoption.”
Unlike several other analysts recently, JPMorgan did not speculate about the impending authorization of a BTC futures ETF as a significant explanation for the price.
Nathan recently got into crypto by investing in stablecoins/altcoins using an algorithmic trading strategy. Shortly thereafter, he began writing about blockchain technology and all things crypto. He has become involved in a number of crypto-related projects and continues to be passionate about all things crypto.