These recent weeks have been one of the most active for Bitcoin. After going to the lows of around $35,000 in June 2021, the coin has since been on a steady rise. The rise would hit its peak after first surpassing the previous all-time highs to reach $65,972.
Most of the crypto community credited these astronomical Bitcoin price rises to the launch of the first crypto Exchange Traded Fund (ETF) in the US. After a long period of either delaying or rejecting the ETFs application, the Securities and Exchange Commission (SEC) at last approved Pro Shares Bitcoin Strategy ETF (BITO).
The ETFs are popular among institutional investors as they allow exposure to digital currencies in a regulated financial environment. It is therefore normal that the crypto community feels it’s behind the Bitcoin value increase.
JP Morgan though has a different look on the Bitcoin price changes. The firm believes that it is not the ETFs that are behind the Bitcoin rally, instead, it’s all down to investor concerns over inflation.
JPM claims even though BITO had a successful launch with the highest-ever first-day natural volume for an ETF, it’s not likely to have introduced such massive fresh capital entering the Bitcoin market.
Instead, OMJ looks at the changing of roles between gold and Bitcoin as a hedge fund as a real reason behind the value increase. JPMorgan strategist Nikolaos Panigirtzoglou claims in a note that the shift from the gold ETFs to Bitcoin has been on since September.
While Gold has been struggling to operate as a hedge against the information given the rising cost, Bitcoin on the other hand has been performing well all through the year. This happens even though the traditional stock market also continues to struggle. Most investors are therefore moving from the gold ETFs to Bitcoin funds.
The investment firm bases its findings on similar price moves following the launch of the Purpose Bitcoin ETF in Canada. Even though the asset had the initial wave, its hype could only last a week.
Has Bitcoin taken over from gold as a hedge for inflation?
A few years back it would have been unimaginable that another asset is replacing gold as a hedge for inflation. However, it now seems as Bitcoin has already surpassed gold as it is currently the safe haven.
JP Morgan is not the only large financial outfit and personality that believes the rise of Bitcoin is down to inflation, not the launch of BITO. Billionaire investor Carl Icahn believes Bitcoin is already the best hedge against inflation. He thinks that inflation is a long term economical aspect that will go on given how much money is being printed.
Even though financial institutions were slow to embrace digital currencies, they are currently moving in droves to acquire Bitcoin and other crypto assets. This is mostly due to the failing traditional stock markets. It also goes a long way in confirming that Bitcoin is currently the safe haven and also the needed hedge. Therefore, as the inflation rates are likely to increase globally, Bitcoin will remain one of the best-performing assets.
