Institutions are hedging against inflation by buying Bitcoin. As the concerns over the growing inflation rises, it seems that gold is not the primary safe haven anymore.
Bitcoin is Better
This week, Bitcoin experienced a 35% rally, all while gold went down 7.3% in the meantime. Despite all the fluctuations, it seems that the investors see it as an opportunity rather than a threat.
Following the mother of all China crackdowns imposed on cryptocurrencies, it seems that it has only motivated institutions to buy the dip. This buying opportunity is marginally responsible for the latest rally as BTC managed to reach well above $50k. However, top financial analysts are shedding light on another fundamental factor responsible for the surge. One that could be a bullish indication for long-term.
JPMorgan on Bitcoin
In a note shared by clients on Thursday, JPMorgan expresses that the rising inflation has institutions buying BTC as a hedge to inflation.
“The re-emergence of inflation concerns among investors has renewed interest in the usage of Bitcoin as an inflation hedge,” says JPMorgan. They believe this to be the primary reason for the price surge. More importantly, this phenomenon is showing us a shift in perspective in the fight between BTC and gold. According to the note, “Institutional investors appear to be returning to Bitcoin perhaps seeing it as a better inflation hedge than gold”. This statement however, is in contrast with the statements of the JPMorgan CEO as he stands a fast opposing position against BTC.
The US is seeing record levels of Inflation and the rest of the world is not doing that much better. The Covid-19 Pandemic has left a detrimental dent on the financial systems of powerful countries. China is facing serious financial challenges and the European union is dealing with Greenflation.
All in all, the state of the world economy signifies numerous upcoming challenges coming our way. In that regard, it is worth noting how day by day, Bitcoin is gaining appeal against gold as an investment asset.
Bullish on Bitcoin
Amongst the Bitcoin maximalist, the prominent figure Michael Saylor is one of the more outspoken BTC advocates. He stated in a tweet on October 7 that gold is losing ground in the rivalry against BTC.
He went so far as to say that the gold is about to collapse. Perhaps it’s a conversation for another day whether that can happen and what disastrous effects will occur if it does.
To conclude, both JPMorgan and Microstrategy are correct about one fact. And that is BTC is looking to be a better asset than gold at least for the time being.
With the rise in cryptocurrency market cap, initially, vast sums of money are moving out of gold to be invested in crypto. Considering the latest developments and growing appeal of crypto, one can assume that the trend will continue. In case of a financial crisis however, there could be an explosive demand for crypto not only from institutions, but regular investors as well. In that case, BTC could reach heights that did not seem possible before. Only time will tell.
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