According to a letter JPMorgan shared with clients on Thursday, Bitcoin is becoming the new gold in terms of inflation hedges.
Bitcoin has now surpassed $50,000 for the first time in a month and is up 87 percent year to date. In the same time frame, gold has fallen 7.3 percent.
Bitcoin has experienced significant volatility this year, but this does not appear to be worrying investors. “Institutional investors appear to be returning to Bitcoin, possibly considering it as a superior inflation hedge than gold,” according to JPMorgan’s Thursday note.
The note comes as no surprise to those who have been tracking Bitcoin investments in 2021. Coinbase reported in its first quarter report in April that of the $335 billion in trades it hosted that quarter, $215 billion came from more than 8,000 institutional investors.
The built-in inflation protection of Bitcoin and other comparable cryptocurrencies is one of the motivators for these deep-pocketed investors to invest in them.
“The reemergence of inflation concerns among investors has rekindled interest in Bitcoin as an inflation hedge,” according to the study.
In a May research, JPMorgan indicated that institutional investors were shifting away from Bitcoin and toward gold, but it still believed that the cryptocurrency might reach $140,000 in the long run.
As the price of the coin rises, the study cites pledges from US politicians that they will not follow China in outlawing the use or mining of cryptocurrency as a driver.