Bitcoin's (EXANTE: Bitcoin) recent 35% surge is triggered by institutional investors who are seeking a hedge to inflation, Business Insider has learned, citing JPMorgan's note. The bank suggests that the largest cryptocurrency by market capitalization might be viewed by some big players on the market as a "better inflation hedge than gold."
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"Institutional investors appear to be returning to bitcoin perhaps seeing it as a better inflation hedge than gold," the bank's analysts wrote in the note.
JPMorgan also believes that at least three of the following cases could have also triggered the recent activity on the market:
- The recent assurances by US policy makers that there is no intention to follow China's steps towards banning the usage or mining of cryptocurrencies.
- The recent rise of the Lightning Network and 2nd layer payments solutions helped by El Salvador's bitcoin adoption.
- The re-emergence of inflation concerns among investors has renewed interest in the usage of bitcoin as an inflation hedge.
JPMorgan's comments come after bitcoin rose by 22% within a week up to $54,000. As of press time, bitcoin's market capitalization is over $1 trillion. Earlier in September, analysts at JPMorgan said that ether futures available for trading on CME were trading at a premium due to the flow of funds from institutional investors in similar bitcoin-based instruments.
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