Bitcoin (BTC) led a 35% gain this week, skyrocketing above the $ 50,000 resistance level and restoring the asset to a $ 1 trillion market cap. J JPMorgan
According to a release JPMorgan shared with clients on Thursday, the recent spike in BTC is largely due to institutional investors looking to hedge against inflation.
“The resurgence of inflation concerns among investors has renewed interest in using Bitcoin as an inflation hedge,” analysts said that perceptions of the value of BTC compared to gold have shifted.
“Institutional investors seem to be returning to Bitcoin, perhaps seeing it as a better inflation hedge than gold.”
Institutions are not alone: Shark Tank star Kevin O’Leary announced earlier this week that cryptocurrencies now make up a larger proportion of his portfolio than gold.
The momentum for Bitcoin contrasts with a JPMorgan report back in May, in which analysts noted that large investors were moving away from Bitcoin to traditional gold at the time.
The implicit endorsement of Bitcoin by major banks and regulators will accelerate Bitcoin’s demise #Yellow and the increase of #Bitcoin is the preferred store of value for institutional and retail investors. https://t.co/7os1ojenHs
– Michael Saylor⚡️ (@michael_saylor) October 7, 2021
JPMorgan provides two other factors that it believes are behind the current rally:
“The latest assurances from US politicians that it is not intended to follow China’s steps to ban the use or mining of cryptocurrencies,” the analysts noted.
“The recent emergence of the Lightning Network and second tier payment solutions was aided by the introduction of Bitcoin in El Salvador.”
Unlike other analysts this week, JPMorgan did not cite speculation about the upcoming approval of Bitcoin futures ETFs as the main price driver.
BTC is currently trading at $ 53,884.76 at press time, according to CoinMarketCap.
Related: The study shows that exposure to cryptocurrencies has a positive effect on portfolios
Although several parts of JPMorgan have shown a growing interest in crypto assets and blockchain initiatives, CEO Jamie Dimon stated in an October 22 interview that he was still skeptical of BTC and even compared it to “a little fool’s gold.”