An increase in institutional investment is reportedly one of the reasons Bitcoin’s price rose more than 35% this week, climbing as high as $55,348
Institutional investors are increasingly seeking exposure to Bitcoin (BTC), now favoring the cryptocurrency over gold as a hedge against inflation, according to U.S. investment bank JPMorgan.
Analysts at the bank have identified growing institutional allocations to BTC as one factor behind Bitcoin’s rise from September lows around $40,000 to roughly $55,000 this week.
In a note published Thursday, JPMorgan also pointed to supportive regulatory signals from U.S. lawmakers and expanding use of the Lightning Network as residents in El Salvador increasingly adopt Bitcoin as legal tender, all contributing to the roughly 35% price surge.
On the regulatory front, Federal Reserve Chair Jerome Powell and SEC Chair Gary Gensler have recently indicated that the U.S. is unlikely to follow China’s blanket ban on cryptocurrencies. Those reassurances helped lift markets and enabled Bitcoin to reclaim the $50,000 level.
Investors favor BTC over gold as a safe-haven investment
JPMorgan reports rising interest in Bitcoin among institutional investors, many of whom appear to be reallocating funds from gold into cryptocurrency.
“Institutional investors seem to be returning to Bitcoin, viewing it perhaps as a better inflation hedge than gold,” the analysts said.
The report highlights changing flows over recent months, showing larger inflows into Bitcoin relative to gold.
JPMorgan noted that more than $10 billion has exited gold-backed ETFs while Bitcoin inflows have exceeded $20 billion. The firm interprets this pattern as evidence of growing institutional investment in Bitcoin, which has helped propel the recent price gains.
At the time of writing, Bitcoin is trading just above $54,500 after a brief dip to $53,000 on Wednesday following negative news around the leading stablecoin Tether (USDT). Historically, October has tended to be a strong month for Bitcoin, and the market may attempt to push past $55,000 and target the technical resistance zone between $58,000 and $60,000 in the coming days.