JP Morgan Chase Says Bitcoin is a Better Hedge Than Gold

In a recent note to investors, investment company JP Morgan said Bitcoin is a better hedge than gold when it comes to inflation.

As per the note, JP Morgan suggests that the institutional investors are coming back to Bitcoin, continuing the shift away from gold as their preferred hedge against inflation. The note reportedly reads that the upcoming shift could be as potent as the one that happened in the fourth quarter of 2020.

JP Morgan Explains the Reasons Behind Bitcoin’s Recent Surge

Bitcoin has been going through a major surge in the last couple of weeks, going above $55,000 at one point for the first time in months. Further, the world’s most popular digital currency is up 87% year to date. What’s even more interesting is that gold is down 7.3% in the same time frame.

Since the start of the year, investors have moved $10 billion out of gold EFTs, while $20 billion has been invested in Bitcoin. JP Morgan sees this as a shift in the investors’ opinions about the best protection against inflation.

Another reason behind Bitcoin’s recent surge is the emergence of Lightning Network, a payment protocol based on the blockchain that boosts transaction fees.

On top of that, the positive news has also come from El Salvador, a country that’s made Bitcoin a legal tender.

Investors Believe US Will Not Follow China in Crypto Crackdowns

If there’s one thing that’s holding Bitcoin down, it’s the governmental crackdown. China has already banned cryptocurrency trading a few weeks ago and investors are worried the US could do something similar.

The good news, however, is that there are some positive signals coming from the Securities and Exchange Commission. According to SEC chairman Gary Gensler, the US will not follow China’s path.

Investors seem to have understood this as a nod that they can proceed to invest in Bitcoin.