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This week, the price of bitcoin (BTC) soared by 35% and exceeded the level of 50 thousand dollars, restoring the market capitalization of $ 1 trillion. Obviously, for this reason, the JPMorgan team sent a notice to clients explaining the influx of institutional investors seeking to insure against inflation.
Increased concerns about inflation among investors have renewed interest in using bitcoin as a means of protection against inflation– the bank’s analysts wrote. – Moreover, the perception of the advantages of bitcoin and its closest real analogue of gold has changed.
It is noteworthy that statistics show a sharp increase in inflation under the Biden administration. According to the U.S. Bureau of Labor Statistics, consumer prices rose 5.4% year-on-year in June. From May to June, consumer prices increased by 0.9%. In January 2021, before Biden came to power, annual inflation was stable at 1.4%.
Moreover, Pantera Capital informed its investors that “in June, the United States printed more money than in the first two centuries since its founding.”
Referring to JPMorgan’s notice, convinced bitcoin investor Michael Saylor said that these events will accelerate the possible “collapse of gold and the growth of bitcoin as a preferred safe haven asset for both institutional and retail investors.”
Interestingly, many investors have already begun to change their minds. For example, former BTC critic Kevin O’Leary from the Shark Tank series is now a big supporter of it. He recently said that cryptocurrency now makes up a larger percentage of his portfolio than gold.
In addition to inflation, JPMorgan cited two other factors that led to the return of the idea of “digital gold”:
- recent assurances by US politicians that there are no intentions to repeat China’s practice of banning the use or mining of cryptocurrencies;
- the recent rise in popularity of the Lightning Network and second-tier payment solutions, as well as the adoption of bitcoin in El Salvador.
Curiously, the banking giant did not mention the approval of crypto-ETFs (exchange-traded funds), while other analysts are confident that such a decision will be announced in the near future, which will further increase the price of bitcoin. At the time of publication, bitcoin, according to CoinGecko, was trading at $55,245.
This JPMorgan report contradicts a document published by the bank in May, which stated that investors are switching from bitcoin to gold. The bank’s CEO Jamie Dimon remains skeptical of BTC, comparing it to “fool’s gold”. He is echoed by other gold bugs, such as economist Peter Schiff and investor Warren Buffett.
It is incorrect to compare gold and bitcoin, at least for the reason that over the past decade bitcoin has demonstrated an average annual growth rate of 200% or more, while gold has added only 1%. This suggests that the digital asset has a great potential for development, which gold does not have.
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