Bitcoin (BTC) led a 35% rally this week by climbing well above the $ 50,000 resistance level and restoring the asset to a $ 1 trillion market cap.
According to a release JPMorgan shared with clients on Thursday, the recent price spike for BTC was largely attributed to institutional investors looking for some hedge against inflation.
“The resurgence of inflation concerns among investors has renewed interest in using Bitcoin as an inflation hedge,” the analysts said, arguing that perceptions of the merits of BTC in relation to gold have changed.
“Institutional investors seem to be returning to Bitcoin and may see it as better inflation protection than gold.”
The institutions are not alone in this. Shark tank Star Kevin O’Leary stated earlier this week that crypto is now a bigger allocation in his portfolio than gold.
The momentum towards Bitcoin contrasts with a JPMorgan report in May, in which analysts noted that large investors were switching from Bitcoin to traditional gold at the time.
The implicit endorsement of Bitcoin by major banks and regulators will accelerate the collapse of #Gold and the rise of #Bitcoin as the safe haven of choice for institutional and retail investors
– Michael Saylor⚡️ (@michael_saylor) October 7, 2021
JPMorgan provided two other factors that it believes are behind the current rally.
“The latest assurances from US politicians that it is not intended to follow China’s steps to ban the use or mining of cryptocurrencies,” the analysts noted, as well as:
“The recent rise of the Lightning Network and second tier payment solutions was aided by the introduction of Bitcoin in El Salvador.”
Unlike other analysts this week, JPMorgan did not cite speculation about the upcoming approval of an exchange-traded Bitcoin futures fund as a major price driver.
BTC is trading at $ 53,884.76 at the time of writing, according to CoinMarketCap.
Related: Crypto exposure has a positive effect on investment portfolios, as the study shows
Although some departments at JPMorgan are showing a growing interest in crypto assets and blockchain initiatives, CEO Jamie Dimon said in an interview on Monday that he continues to be skeptical of BTC and even compared it to “a little fool’s gold”.