Analysts at JPMorgan argue that the rise in the price of BTC in recent weeks is due to the fact that institutional investors are investing in the crypto asset to protect against inflation.
According to a Business Insider publication, JPMorgan analysts have identified three main reasons for the rise in the price of BTC in recent weeks. In their view, BTC’s growing role as a purported inflation hedge has weakened the gold price, which has remained unchanged for nearly two years.
“Institutional investors are returning to BTC, perhaps seeing it as a better inflation hedge than gold,” notes JPMorgan.
According to analysts, the previous trend of money outflow from gold to BTC has resumed in recent weeks. JPMorgan has identified three main factors behind the rise in BTC from $ 40,000 to $ 55,000 in a few weeks:
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Recent assurances from US politicians that they do not intend to follow China’s steps to ban the use or mining of cryptocurrencies.
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The rise in popularity of the Lightning Network and second-tier payment solutions, fueled by the adoption of BTC as legal tender in El Salvador.
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A resurgence of inflation concerns among investors has renewed interest in using BTC as a hedge against inflation.
Since gold has not been a reliable hedge against inflation in recent months, investors are looking for alternative solutions. According to the bank, since the beginning of the year, more than $ 10 billion have been withdrawn from ETFs on gold, and more than $ 20 billion have been placed in BTC funds. Investments of institutions in BTC helped to increase the share of cryptoassets in the total cryptocurrency market to almost 45% from a minimum of 41% in the middle. September.
“The rise in BTC dominance is a healthy trend as it is more likely to reflect institutional participation,” says JPMorgan.
Although the price of BTC is still about 15% below the all-time high of $ 65,000 reached in mid-April, the cryptocurrency is up 86% since the beginning of the year. Meanwhile, gold has dropped 7% this year.
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