JPMorgan Chase & CoThere are many factors driving the price of Bitcoin back above $55000, including increased interest from institutional investors seeking to hedge against inflation, it said in a report on Thursday.
"Institutional investors seem to be returning to Bitcoin and maybe they think Bitcoin is a better hedge against inflation than gold," said JPMorgan Chase & Co. " The bank added that the previous trend of money flowing out of gold and into Bitcoin had re-emerged in recent weeks.
JPMorgan Chase & Co listed three main drivers of why Bitcoin rose from $40, 000 to more than $55000 in a few weeks:
1. "Federal Reserve Chairman Colin Powell made it clear that there is no plan to crack down on cryptocurrencies." in addition, Gary Gensler, chairman of the Securities and Exchange Commission (SEC), also said that the agency neither has nor intends to ban digital assets.
2. The rise of Lightning Network (Lightning Network) and second-tier payment solutions has benefited from the adoption of bitcoin in El Salvador.
3. "investors' concerns about inflation have re-emerged, making them interested in using Bitcoin as a hedge against inflation."
The price of gold is down 7 per cent so far this year, and investors are taking action as it fails to provide a reliable hedge against inflation. According to JPMorgan Chase & Co, more than $10 billion has flowed out of gold ETF since the start of the year, while more than $20 billion has flowed into bitcoin funds.
These inflows pushed Bitcoin's share of the entire cryptocurrency market to nearly 45 per cent from a low of 41 per cent in mid-September. "the increase in Bitcoin share is a healthy development because it is more likely to reflect institutional participation than smaller cryptocurrencies," said JPMorgan Chase & Co. "