According to market analysts at banking giant JPMorgan, there are three reasons for Bitcoin’s recent surge.
According to the banking titan in a note to Business Insider, one catalyst of Bitcoin’s recent rally from $40,000 to $55,000 is the growing belief that it is a better inflation hedge than gold.
Bitcoin appears to be regaining favor with institutional investors, who may see it as a better inflation hedge than gold…
The resurgence of inflation fears among investors has reignited interest in Bitcoin as an inflation hedge.”
According to the bank, $10 billion has flowed out of gold ETFs since the beginning of 2021, while $20 billion has flowed into Bitcoin funds.
According to JPMorgan, another reason why BTC has surpassed the $1 trillion market valuation is SEC chair Gary Gensler’s recent statements that the US will not follow China in terms of crypto regulations.
“Recent assurances from US policymakers that there are no plans to follow China’s lead in prohibiting the use or mining of cryptocurrencies [have aided BTC].”
Finally, JPMorgan claims that Bitcoin is rising due to an increase in Lightning Network users, which has been bolstered by El Salvador’s adoption of BTC as legal tender. The Lightning Network is a layer-2 payments protocol that increases transaction speeds on top of blockchains such as Bitcoin.
2.1 million Salvadorans are actively using the state-sponsored Chivo crypto wallet, according to El Salvador President Nayib Bukele, just three weeks after its launch.