JPMorgan, a global investment bank, claims that inflation fears are driving the price of bitcoin to new highs, rather than interest in recently launched bitcoin futures exchange-traded funds (ETFs). The firm noted that investors are shifting out of gold ETFs and into bitcoin funds, noting that “the flow shift remains intact, supporting a bullish outlook for bitcoin into year-end.”
Inflation, according to JPMorgan, is driving up the price of Bitcoin.
JPMorgan Chase analysts, led by Nikolaos Panigirtzoglou, published a research note last week explaining that inflation, rather than the hype surrounding the first U.S. bitcoin futures exchange-traded fund, has been driving up the price of bitcoin to all-time highs (ETF).
The Proshares Bitcoin Strategy ETF, ticker BITO, debuted on Tuesday and quickly attracted $1 billion in investments. The second bitcoin futures ETF in the United States debuted on Friday.
According to JPMorgan analysts, “By itself, the launch of BITO is unlikely to trigger a new phase of significantly more fresh capital entering bitcoin,” adding:
Instead, we believe that the perception of bitcoin as a better inflation hedge than gold is the primary reason for the current upswing, which has resulted in a shift away from gold ETFs and toward bitcoin funds since September.
According to the analysts, “the initial hype with BITO may fade after a week.”
According to data, the price of bitcoin reached an all-time high of $66,899 on Tuesday. BTC is currently worth around $61,249 at the time of writing. It has increased by approximately 40% since the beginning of the month and by more than 90% since the beginning of the year. When the market anticipated the Securities and Exchange Commission’s approval of a bitcoin futures ETF, the price of BTC skyrocketed (SEC).
Not only have JPMorgan analysts explained that the real driver behind bitcoin’s price increase was growing inflationary concerns, but they have also noted that this has pushed investors to seek investments that can act as a hedge against this risk, such as gold and bitcoin.
Gold was once a good way to protect against inflation. However, it has failed to respond in recent weeks to increased concerns about rising cost pressures. This has prompted investors to look into alternative investments, with many shifting away from gold ETFs and into bitcoin funds, according to the analysts, who added:
This flow shift is still in place, supporting a bullish outlook for bitcoin through the end of the year.
JPMorgan analysts are not the only ones who believe bitcoin is a better inflation hedge than gold. Recently, billionaire fund manager Paul Tudor Jones stated that bitcoin had won the race against gold and that he preferred bitcoin to gold as an inflation hedge.