Nikolaos Panigirtzoglou led JPMorgan Chase’s analysts and published a research paper last week explaining why inflation is driving up bitcoin’s price to new highs, rather than the hype surrounding the first U.S. Bitcoin futures exchange-traded funds (ETF).
The Proshares Bitcoin Strategy ETF ticker BITO began trading Tuesday. It quickly amassed $1 million in investments. The second Bitcoin futures ETF launched Friday.
According to JPMorgan analysts, launching BITO by itself is unlikely to result in a new phase of significant more bitcoin capital.
We believe that bitcoin is perceived as an inflation hedge better than gold, and this has triggered a shift from gold ETFs to bitcoin funds since September.
Analysts stated that BITO’s initial hype could quickly fade after a week.
Based on data from Bitcoin.com Markets, the price of bitcoin shot up to an all time high of $66,899 on Tuesday. BTC is currently at $61,249. It has increased by approximately 40% over the past month, and by more than 90% in the last year. When the U.S. Securities and Exchange Commission approved a bitcoin futures ETF, the BTC price rose substantially.
Analysts at JPMorgan have explained that bitcoin’s price rise was due to growing inflation concerns. They also pointed out that this has led investors to look for investments that can be used as a hedge against such risks, like gold and bitcoin.
Inflation hedges were once possible with gold. It has been unable to address rising costs in recent weeks, which has led to increased concerns. Investors began to look for alternative investments and have moved away from ETFs that invest in gold to bitcoin funds.
This flow shift is still intact, supporting a bullish outlook on bitcoin for the year-end.
JPMorgan analysts aren’t the only ones who see bitcoin as a better option than gold for inflation hedges. Billionaire fund manager Paul Tudor Jones recently stated that bitcoin has won the race against gold, and that he prefers the cryptocurrency to gold for inflation hedge.