Institutional investors see bitcoin as the best inflation hedge and prefer it over gold, JPMorgan said in a research note.
“Bitcoin’s allure as an inflation hedge” is bringing institutional investors back to the cryptocurrency market, JPMorgan's Nikolaos Panigirtzoglou wrote in a research note to clients on October 6.
According to him, the influx of institutions into the crypto market, which was observed in the IV quarter of 2020 and at the beginning of 2021, and provoked the bitcoin explosive growth at that time, intensified again in recent weeks.
The bitcoin rate recently surpassed $50,000 again. In comparison with the beginning of 2021, bitcoin rose in price by 85%. The Ethereum price jumped almost 5 times since the beginning of 2021.
Meanwhile, gold prices continue to hover below $1,800 an ounce, dropping 7% since early 2021.
Panigirtzoglou notes “institutional investors appear to be returning to Bitcoin, perhaps seeing it as a better inflation hedge than gold.”
“The reemergence of inflation concerns among investors has renewed interest in the usage of Bitcoin as an inflation hedge,” the report said.
In April, crypto exchange Coinbase reported its Q1 earnings noting that out of $335 billion of transactions that were made on its platform in the first three months of 2021, $215 billion came from more than 8,000 institutional investors.