Quantitative strategists at JPMorgan including Nikolaos Panigirtzoglou have revealed they believe institutional investor adoption of bitcoin has ‘only begun’, while that of gold is “very advanced,” which could mean BTC will take over some of gold’s market capitalization.
According to Bloomberg, the bank’s strategists pointed out that money has been pouring out of gold funds and into bitcoin funds since October, in a trend that’s seemingly only going to continue in the long run as more institutional investors gain exposure to cryptocurrencies.
As cryptocurrencies become increasingly popular as an asset class, JPMorgan predicts a major shift in the crypto and gold market as institutional investors diversify their portfolios. The trend could mean trouble for precious metals investors as if cryptos take up a small slice of investor allocations from gold. The strategists wrote:
The adoption of bitcoin by institutional investors has only begun, while for gold its adoption by institutional investors is very advanced
The bank’s strategists pointed out that the Grayscale Bitcoin Trust (GBTC) saw inflows of nearly $2 billion since October, while gold exchange-traded funds (ETFs) saw outflows of around $7 billion over the same period.
Their calculations suggest that BTC accounts for 0.18% of family office assets, while gold ETFs account for 3.3%. Investors could tilt the needle for BTC over gold by buying one unit of GBTC and selling three units of the SPDR Gold Trust, they said.
If this medium to longer-term thesis proves right, the price of gold would suffer from a structural flow headwind over the coming years.
In the short-term, however, the analysts believe there’s a chance the price of bitcoin will endure a correction, while gold is due for a recovery. Momentum signals for the flagship cryptocurrency have been deteriorating, suggesting an impending sell-off from investors using these signals to trade.
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