Global investment bank JPMorgan says institutional investors are returning to bitcoin, seeing the cryptocurrency as a better hedge than gold. The company’s analysts describe three major drivers that have boosted the price of bitcoin in recent weeks, including assurances that US policy makers will not ban cryptocurrencies.
JPMorgan Sees Renewed Interest in Bitcoin
JPMorgan published a research note Thursday stating that institutional investors are returning to bitcoin. Citing the trend of money flowing from gold to BTC, the company’s analysts wrote:
Institutional investors seem to be returning to bitcoin, and may see it as a better inflation hedge than gold.
Analysts explained that there are three main drivers that push the price of Bitcoin from around $40k to around $55,000 in a short period of time. Bitcoin price is $53,853.14 at the time of writing based on data from Bitcoin.com Markets.
The first is “recent assurances by US policy makers that there is no intention to follow through on China’s steps towards banning the use or mining of cryptocurrencies.” Federal Reserve Chairman Jerome Powell and Securities and Exchange Commission Chairman Gary Gensler told Congress this week that they do not intend to ban cryptocurrencies as China has. The SEC chief said his agency is taking a different approach to China, focusing on investor protection and regulation.
The second reason is “the recent rise in the Lightning Network and Layer 2 payments solutions aided by El Salvador’s adoption of bitcoin,” JPMorgan explained. El Salvador submitted a legal tender for bitcoin in early September. The state bought 700 BTC and the president Najib Bukele claimed That 3 million Salvadorans are already using the Chivo government bitcoin wallet.
The third reason is:
The resurgence of inflation fears among investors has led to a renewed interest in using bitcoin as an inflation hedge.
JPMorgan further explained that the trend of money flowing from gold to bitcoin has re-emerged in recent weeks. In May, the company experienced the opposite trend as money flowed from BTC into gold.
According to the company, more than $10 billion has flown in from gold exchange-traded funds (ETFs) since the beginning of the year. During the same time period, more than $20 billion in bitcoin cash flowed in.
Noting that these inflows of funds into bitcoin have helped push BTC’s share of the total cryptocurrency market to nearly 45% from 41% in mid-September, the analysts concluded:
The increase in bitcoin’s share is a healthy development as it is more likely to reflect institutional involvement than smaller cryptocurrencies.
Meanwhile, JPMorgan CEO Jamie Dimon believes that bitcoin has no intrinsic value and regulators will “orchestrate the hell out of it.” However, his investment bank is currently offering several crypto investments to clients.
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