According to prominent investment bank JPMorgan, gold could become less appealing in the long run due to institutional investors’ increased preference for cryptocurrency especially Bitcoin.
“The adoption of bitcoin by institutional investors has only begun, while for gold its adoption by institutional investors is very advanced”
-Nikolas Panigirtzoglou, managing director, JPMorgan.
A research done by the banking giant estimates that $7 billion has left gold’s exchange-traded funds (ETFs) since October. This is in contrast to the inflows recorded by Grayscale Bitcoin Trust (owned by Digital Currency Group) which has been in the region of $2 billion also since October. Grayscale set a new record for its assets under management when they recently rose above $10 billion.
JPMorgan said it believes the trend will persist and will affect the price of gold. According to the bank’s estimations, the precious metal occupies 3.3% of family office assets compared to Bitcoin’s 0.18%. Bitcoin’s market value of $343 billion may pale in comparison to gold’s $10 trillion, but this implies that any flow of cash from gold to bitcoin would result in losses for gold and make gains for bitcoin ( which has come to be regarded as the former’s ‘digital version’ ).
As gold feels the heat, the appeal of BTC as an inflation hedge over the past few months has been strengthened by the investments of several notable companies in it including but not limited to Paypal, Square and MicroStrategy.