JPMorgan: Big Investors Choosing Bitcoin over Gold

JPMorgan: Big Investors Choosing Bitcoin over Gold

11 months ago

The bank’s analysts told clients that the first cryptocurrency is becoming seen as a better inflation hedge than gold.

JPMorgan: Big Investors Choosing Bitcoin over Gold

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JPMorgan says big institutional investors such as banks and hedge funds are starting to see Bitcoin as a better and better tool for fighting inflation.

The first cryptocurrency, which saw its market capitalization push back over $1 trillion this week, is not inflationary because its supply is limited to no more than 21 million. Fiat currency, by contrast can be printed at the will of governments, raising inflationary pressure by adding to the money supply. 
In a note sent to clients, the bank’s analysts pointed the Bitcoin's recent rally from below $40,000 to more than $55,000 recently, saying:

"Institutional investors appear to be returning to Bitcoin perhaps seeing it as a better inflation hedge than gold.”

The bank gave three reasons for this.

First, it pointed to recent comments by Federal Reserve Chairman Jerome Powell and SEC Chairman Gary Gensler “that there is no intention to follow China's steps towards banning the usage or mining of cryptocurrencies."

Then it pointed to the “recent rise of the Lightning Network and layer-two payments solutions helped by El Salvador's Bitcoin adoption."

Then it wrapped up with the big one, saying: 

"The re-emergence of inflation concerns among investors has renewed interest in the usage of Bitcoin as an inflation hedge."

The advice comes just days after Bank of America said “crypto is too large to ignore.”
The bank added, that with a $2 trillion market value and upwards of 200 million users, digital assets can become “an entirely new asset class.”

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Skeptics Remain

JPMorgan Chase CEO Jamie Dimon, however, is a leading critic who compared bitcoin to “fool’s gold” this week, pointing to China’s recent ban on retail cryptocurrency trading. He said:

“It’s got no intrinsic value, and regulators are going to regulate the hell out of it… If people are using it for tax avoidance and sex trafficking and ransomware, it’s going to be regulated, whether you like it or not.”

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