- According to JPMorgan, institutional investor’s need to hedge against inflation is the cause of Bitcoin’s ongoing uptrend.
- Bitcoin is being considered by various institutional investors as an alternative hedge to gold.
Trading at $53,878 at the time of this writing, Bitcoin has made an approximated 23% surge from the $40k level in the last 10 days. Price has been breaking all the key technical resistance levels without much strain. This is a representation of significant buys into the market by the big players. The chart below shows the 4hr representation of Bitcoin’s price;
image from tradingview
According to Coinmarketcap, Bitcoin’s market valuation is currently $1.01 trillion. 10 days ago, the market valuation was below the $1 trillion mark. According to JPMorgan, Institutional investors’ need to hedge against inflation is the number one cause of this surge. A number of investors are turning to Bitcoin as a substitution to Gold. With gold having depicted insignificant growth in the past 2 years, investors now consider Bitcoin to be a better hedge.
Secondly, the US policy makers’ assurance that there was no plan to ban the mining or usage of crypto in the country has raised confidence amongst investors.
Thirdly, the adoption of BTC by El Salvador has helped in the rise of the second layer payments provisions and the Lightning Network.
According to JPMorgan, while an estimated $10 billion has been withdrawn from gold ETFs since January 2021, an estimated $20 billion has been added to Bitcoin funds. The ongoing massive buying of BTC has pushed Bitcoin’s market share to 0.45 of the total crypto market capital. This is an indication of institutional presence amongst Bitcoin’s investors.
While gold has drop 7% from the start of this year, Bitcoin has surged 87% in the same period. see the graph below;
Image from JP morgan
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