Institutions buying Bitcoin rather than gold as inflation cranks up: JPMorgan

Bitcoin (BTC), which has soared above the $50,000 resistance level to lead a 35% rally and restore a $1 trillion market capitalization, has seen a 35% increase in trading this week.

According to JPMorgans Thursday note to clients, the recent rise in BTC prices was primarily attributable to institutional investors seeking to hedge against inflation.

Analysts stated that there was a shift in opinion about the benefits of Bitcoin relative to gold due to “the reemergence of inflation worries among investors.”

“Institutional investors seem to be returning to Bitcoin possibly seeing it as an improved inflation hedge than gold.”

Institutions are not the only ones that have crypto: Shark Tank star Kevin OLeary said earlier this week, Crypto now accounts for a greater portion of his portfolio than Gold.

This is contrary to JPMorgans May report, which noted that large investors were shifting away from Bitcoin in favor of traditional 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.
— Michael Saylor (@michael_saylor) October 7, 2021

JPMorgan also provided two additional factors it believes are responsible for the current rally.

Analysts noted that “the recent assurances made by US policymakers that they are not planning to follow Chinas steps towards banning mining or usage of cryptocurrencies” were also mentioned.

“The Lightning Networks recent growth and 2nd-layer payments solutions were helped by El Salvador’s Bitcoin adoption.”

JPMorgan, unlike other analysts this week did not mention speculation about the approval of a Bitcoin futures exchange traded fund (ETF) as a major driver of the price.

According to CoinMarketCap, BTC trades at $53,884.76 at the time this article was written.

Study shows that crypto exposure can have a positive effect on investment portfolios

JPMorgan divisions may have expressed an interest in blockchain assets and initiatives. CEO Jamie Dimon said in an interview that he is still skeptical of BTC. He even described it as “a little bit like fools gold”.