JPMorgan analysts argue that the recent surge in Bitcoin and the broader cryptocurrency market is not solely driven by investors shifting from gold to Bitcoin.
Instead, they attribute the rally to retail and speculative institutional investors purchasing both gold and Bitcoin futures simultaneously.
Despite perceptions of a mass exodus from gold to Bitcoin, JPMorgan’s analysis suggests otherwise. They highlight the significant role of speculative institutional investors, such as hedge funds and momentum traders, in driving the market rally through heavy investments in both gold and Bitcoin futures since February.
Contrary to popular belief, outflows from gold ETFs have been ongoing for the past four years, accelerated by the pandemic, with private investors preferring physical gold over gold ETFs for privacy and tangibility.
Recent inflows into spot Bitcoin ETFs primarily represent a rotational capital shift from existing crypto venues rather than entirely new investment inflows.
Additionally, MicroStrategy’s substantial Bitcoin purchases have also contributed to the crypto rally, but JPMorgan analysts caution against the risks associated with leveraging Bitcoin purchases through convertible notes.
Overall, they emphasize that the surge in Bitcoin and the cryptocurrency market is influenced by a combination of factors, including retail and institutional investor activity, speculative trading, and corporate purchases, rather than a simple shift from gold to Bitcoin.
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