JP Morgan stated that this week’s Bitcoin rally is a result of institutional investors hedging against inflation. More and more investors are buying the leading cryptocurrencies as inflation cranks up to the roof.
With leading a 35% rally, Bitcoin soars far above the $50K resistance level this week. This resulted in a $1 trillion market capitalization to the asset.
JPMorgan shared a note with clients on Thursday which said that the recent increase in BTC’s price is mainly due to the inflation hedge by institutional investors. It said: “The re-emergence of inflation concerns among investors has renewed interest in the usage of Bitcoin as an inflation hedge.”
The analysts argued about the shift in perception as to the gains of BTC as compared to gold. They also mentioned:
“Institutional investors appear to be returning to Bitcoin perhaps seeing it as a better inflation hedge than gold.”
JP Morgan offered two factors that are resulting in the current rally. According to analysts:
“The recent assurances by US policymakers that there is no intention to follow China’s steps towards banning the usage or mining of cryptocurrencies.” “The recent rise of the Lightning Network and 2nd layer payments solutions helped by El Salvador’s Bitcoin adoption.”
At the time of writing, BTC currently trades at $53,786.67, according to CoinMarketCap.
Despite the growing interest of some divisions of JPMorgan in crypto and Blockchain, their CEO stated in an interview that he is a doubter of BTC and compared it to “a little bit of fool’s gold.”