coinputin.com – Gold may lose its appeal in the long term due to institutional investors ‘ growing preference for Bitcoin, according to investment banking giant JPMorgan.
Nikolaos Panigirtzoglou, a quantitative strategist and managing director at JPMorgan Bank, says that while institutional investors have just begun to adopt Bitcoin, Gold is quite common among institutional investors.
Research by the investment bank found that since October, $ 7 billion has flowed from gold’s exchange-traded funds, while $ 2 billion in inflows to the Grayscale Bitcoin Trust over the same period. The amount of assets under grayscale’s management was recently recorded as $ 10 billion for the first time.
JPMorgan said it expected the trend to continue and have an impact on the price of gold. While Bitcoin is the largest cryptocurrency by market capitalization, its current capitalization of $ 343 billion is quite small compared with gold’s market capitalization of more than $ 10 trillion. Therefore, a cash transfer from gold to Bitcoin can bring big losses for gold and big gains for cryptocurrency as well.
JPMorgan’s strategists say:
“If this medium-to long-term thesis proves correct, the price of gold will be damaged by a structural wind wave in the coming years.”
Gold is already feeling the negative impact of a change in the allocation of funds by institutional investors. At a current price of $ 1,836 an ounce, gold fell 1.5% on a quarter-on-quarter basis. Bitcoin, on the other hand, has gained 71% in the quarter. The leading cryptocurrency is currently trading at $ 18,454 and hit an all-time high, rising to $ 19,920 on December 1.
Several publicly traded companies have invested money in Bitcoin over the past few months, reinforcing Bitcoin’s appeal as a reserve asset and inflation protection.