Bitcoin is “a better inflation hedge than gold”, JPMorgan analysts say but CEO remains skeptic


This week, Bitcoin (BTC) soared 35 percent to rise above the $50K level, restoring its $1T market capitalization. JPMorgan shared a note with clients on Thursday, attributing the rebound to institutional investors seeking a hedge against inflation.

“The re-emergence of inflation concerns among investors has renewed interest in the usage of Bitcoin as an inflation hedge,” the bank’s analysts wrote. Moreover, there has been a shift in perception regarding the benefits of Bitcoin and its closest real-world analogue, gold.

Notably, statistics show that inflation has been surging under the Biden administration. According to The Bureau of Labor Statistics (BLS), consumer prices increased by 5.4 percent in June on an annualized basis. Between May and June, consumer prices increased by 0.9 percent. In Jan. 2021, before Biden took over the presidency, annual inflation was at a stable 1.4 percent.

On top of that, Pantera Capital noted in a letter to investors that “the United States printed more money in June than in the first two centuries after its founding.”

Bitcoin compliments gold market

Referencing JPMorgan’s note, Bitcoin serial investor Michael Saylor said the events will accelerate the eventual “collapse of gold and the rise of Bitcoin as the preferred safe-haven store of value for both institutional and retail investors.”

Other investors have also expressed this change of heart. For instance, Shark Tank’s Kevin O’Leary, a former BTC critic, is now a Bitcoin enthusiast. He recently shared that crypto now accounts for a greater percentage of his portfolio than gold does.

Apart from inflation, JPMorgan provided two other factors behind the recent ‘digital gold’ spring back:

The recent assurances by US policymakers that there is no intention to follow China’s steps towards banning the usage or mining of cryptocurrencies,

The recent rise of the Lightning Network and 2nd layer payments solutions helped by El Salvador’s Bitcoin adoption.

Nonetheless, the giant bank did not cite speculation of the approval of crypto ETFs (exchange-traded funds). Other analysts are confident that such a decision will be announced soon, further driving up the price of Bitcoin. At press time, BTC was trading at $54, 211 according to our data.

Yesterday’s JPMorgan report contradicts one the bank released in May showing that while investors were migrating from Bitcoin to gold. Additionally, the bank’s CEO Jamie Dimon, remains a BTC skeptic, comparing it to “a little bit of fool’s gold.” He is joined by other gold bugs such as economist Peter Schiff and investor Warren Buffett.

But even then, comparing gold and Bitcoin is only on an apple-to-oranges comparison as there is nothing quite like Bitcoin for an apples-to-apples comparison. That said, in the last decade, Bitcoin has experienced a 200+ percent compound annual growth rate, while gold has had only 1 percent, shows.

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