JP Morgan: Bitcoin May Replace Gold As The New Inflation Hedge


Writer: Lois

Photo: Camilo Freedman/Bloomberg

According to JP Morgan’s note to clients on Thursday, Bitcoin may become the new gold for investments to protect against inflation.

However, JP Morgan reported in May that institutional investors were switching from cryptocurrency to gold. Nevertheless, the global financial leader maintained that Bitcoin could reach 140,000 USD in the long term.

Although Bitcoin has had some significant fluctuations this year, investors remain unbothered.

JP Morgan also cited assurances by US policymakers that they would not ban the usage or mining of crypto like China has.

“Institutional investors appear to be returning to Bitcoin, perhaps seeing it as a better inflation hedge than gold,” stated JP Morgan.

The advice comes as Bitcoin surpassed 50,000 USD per token last week, for the first time in a month, rising 87 per cent year-to-date. Meanwhile, within the same period, gold fell 7.3 per cent.

Bitcoin then shot over 50,000 USD to exceed 55,000 USD for the first time in five months. This increase of almost 10 per cent over a few hours is attributed to Dawn Fitzpatrick, head of Soros Fund Management (George Soros’s hedge fund), revealing that the fund owns some cryptocurrencies. However, the coin has yet to surpass its record of 65,000 USD in April.

JP Morgan’s report also attributes the recent rise of the Lightning Network and 2nd layer payments solutions helped by El Salvador’s Bitcoin adoption as beneficial for Bitcoin.

Numerous other well-known investors have also shown support for cryptocurrencies, like Shark Tank star and businessman Kevin O’Leary.

In April, the crypto exchange Coinbase released a report revealing that of the 335 billion USD in trades it hosted in its first quarter, 215 billion USD came from over 8,000 institutional investors. A central motivation for these investments in Bitcoin and similar cryptocurrencies is their built-in protection against inflation.

“The reemergence of inflation concerns among investors has renewed interest in the usage of Bitcoin as an inflation hedge,” stated the report.

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