Global investment bank JP Morgan says institutional investors are turning to Bitcoin, seeing cryptocurrency as a better hedge than gold. Analysts at the firm have outlined three key drivers for the rise in bitcoin prices in recent weeks, including assurances that U.S. policymakers will not ban cryptocurrencies.
JPMorgan is seeing renewed interest in Bitcoin
JPMorgan released a research note on 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 coming back to Bitcoin seeing it as a better inflation hedge than gold.
Analysts have explained that the three main drivers are moving the price of Bitcoin from around $ 40K to around K 55K in a short period of time. Bitcoin is priced at $ 53,853.14 at the time of writing based on data from the Bitcoin.com market.
The first is “recent assurances from US policymakers that there is no intention to follow China’s steps to ban the use of cryptocurrencies or mining.” Federal Reserve Chairman Jerome Powell and SEC Chairman Gary Gensler both told Congress this week that they have no intention of banning cryptocurrencies like China. The SEC chief said his agency was taking a different approach to China, focusing on investor protection and control.
The second reason is “the recent rise of the Lightning network and second-tier payment solutions through the adoption of Bitcoin by El Salvador,” JPMorgan details. El Salvador held a bitcoin legal tender in early September. The country has bought 700 BTCs and President Naib Bukel Claimed That 3 million Salvadoran is already using the government’s bitcoin wallet, Chivo.
The third reason is:
The re-emergence of inflationary concerns among investors has created new interest in using Bitcoin as an inflation hedge.
JPMorgan further explained that the trend of funds flowing from gold to Bitcoin has re-emerged in recent weeks. In May, the company saw the opposite trend where funds from BTC flowed into gold.
More than 10 10 billion has flowed from the Gold Exchange-Trade Fund (ETF) since the beginning of the year, according to the organization. During the same period, more than 20 20 billion in Bitcoin flowed into the fund.
Noting that the flow of this fund to Bitcoin helped reduce BTC’s share of the total cryptocurrency market from 41% to about 45% in mid-September, analysts concluded:
The rise in Bitcoin shares is a healthy development because it is more likely to reflect institutional participation than small cryptocurrencies.
Meanwhile, JPMorgan CEO Jamie Damon believes that Bitcoin has no underlying value and regulators will “control hell from it.” However, its investment bank is currently offering clients multiple crypto investments.
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