JP Morgan – Bitcoin Will Gobble Gold’s Market Share
Increasing mainstream adoption of Bitcoin (BTC) as a store of value is having a straight forward effect on gold, paving the way for a huge change in institutional allocation between two assets, as per analysts at JP Morgan Chase.
Quantitative strategists such as Nikolaos Panigirtzoglou trust that Bitcoin, which is often referred to as digital gold, will encourage investors to shift focus away from precious metals, likely for several years, resulting in a huge deviation in valuation between the two investment vehicles.
The bank has pointed out that Bitcoin only represents 0.18% of assets stored at family run businesses, in comparison to 3.30% for gold exchange-traded funds. Utilizing the info as a beginning point, only a portion of redistribution from gold to Bitcoin could cause “structural headwinds” in bullion’s valuation.
Bloomberg’s news has published the argument put forth by strategists, through a note to clients, in favor of Bitcoin:
“The adoption of bitcoin by institutional investors has only begun, while for gold, its adoption by institutional investors is very advanced. If this medium to longer-term thesis proves right, the price of gold would suffer from a structural headwind over the coming years.”
Apart from JP Morgan’s analysis, there is a precise proof that institutional interest in Bitcoin is increasing. Grayscale, a crypto asset manager, has recorded sharp rise in investments in Bitcoin and Ethereum (ETH) trusts. Specifically, Bitcoins collectively purchased by Grayscale, PayPal and Cash App are greater than BTC mined on a daily basis.
Data consolidator CoinShares has also stated on the latest rise in crypto capital inflows. In the past four weeks, Bitcoin based investment vehicles have attracted investments to the tune of about $1.40 billion. Gold, in the meantime, has seen record payment outflows of $9.20 billion.
Investors interested to move forward with the prevailing trend can buy an unit of Grayscale’s Bitcoin Trust and dilute three units of the SPDR Gold Shares trust, the bank mentioned.
Even though Bitcoin’s long-term value appreciation story is intact, the numero uno crypto’s price rally had been overstretched in the last few days. Analysts and market watchers, in general, believe that the crypto would come under strong selling pressure in the near-term.
Bitcoin dipped below $18,000 Wednesday, before rebounding to trade at $18,350 levels.