JP Morgan Chase says the rise of cryptocurrencies in mainstream finance is overshadowing it. According to the quantitative strategists of the bank, including Nikolaos Panigirtzoglou, Bitcoin (BTC) funds have flowed into and out of gold since October; This trend will continue in the long run as more institutional investors take positions in cryptocurrencies.
JPMorgan is one of the few Wall Street banks to forecast a major shift in the gold and crypto markets as digital currencies become increasingly popular as an asset class. If investors move a small portion of their allocations from gold to cryptocurrency, it poses a problem for the bulls in the precious metal markets in the coming years.
“Bitcoin adoption by institutional investors has just begun, but adoption of gold by institutional investors is very advanced,” JPMorgan strategists wrote.
According to JPMorgan, Grayscale Bitcoin Trust, an exchange-traded security popular with institutions, has seen inflows of nearly $ 2 billion since October; On the other hand, outflows of 7 billion dollars were seen from the exchange traded funds backed by gold.
JPMorgan’s calculations show that Bitcoin only accounts for 0.18% of family office assets. Gold ETFs make up 3.3% of family offices’ assets. Turning the orbit from gold to Bitcoin represents billions of dollars in cash transfers.
JPM: Bitcoin price likely to rise excessively
The bank announced one of these transfer cases as “buying one unit of Grayscale and selling three units from SPDR Gold Trust”. JPM strategists used the following statements:
“IF THIS MEDIUM TO LONG-TERM ARGUMENT IS JUSTIFIED, THE GOLD PRICE WILL BE DAMAGED FROM A STRUCTURAL WIND WAVE IN THE FOLLOWING YEARS.”
The bank said that in the short term, Bitcoin prices are likely to rise excessively and gold is expected to recover. Momentum signals for bitcoin have worsened, which will likely lead to a sale by traders trading according to price trends.
Bitcoin has dropped 6% since its closing at $ 19,462.14 last week, its all-time high.