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Key Takeaways
- JPMorgan’s report counters the theory of investors shifting from gold to Bitcoin, revealing that investments are being made in both.
- Institutional and speculative investors have significantly contributed to the rally in both gold and Bitcoin futures since February.
- MicroStrategy’s substantial Bitcoin purchases are highlighted as a factor adding to the market’s current dynamics, with a note on the potential risks of such strategies.
JPMorgan dispels the myth of gold and Bitcoin’s (BTC) rivalry, stating that enthusiasts are not choosing one over the other but are indeed investing in both.
The report, released on Thursday, challenges the previously held belief that there has been a significant shift of investment from gold to Bitcoin.
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Contrary to speculations fueled by the noticeable outflows from gold ETFs and the concurrent inflow into Bitcoin ETFs, the bank’s research finds no evidence of a direct switch between these assets.
Nikolaos Panigirtzoglou and his team of analysts state:
Private investors and individuals have propagated both gold and Bitcoin year-to-date rather than shifting from the former to the latter.
The report highlights that the participation of speculative institutional investors, including hedge funds and momentum traders, is instrumental in driving up the prices of both assets. Since February, they’ve been actively buying futures in both gold and Bitcoin, arguably more aggressively than retail investors.
The data shows a significant position build-up, with a $7 billion increase in Bitcoin futures and a $30 billion rise in gold futures. This simultaneous investment surge underscores a broader interest in both assets rather than a competitive displacement.
One of the pivotal moments in this year’s investment landscape, as pointed out by JPMorgan, is the involvement of MicroStrategy. The report observes, underlining the influential role of corporate strategy in shaping market dynamics:
The debt-funded Bitcoin purchases by MicroStrategy add leverage and froth to the current crypto rally and raise the risk of more severe deleveraging in a potential downturn in the future.
By debunking the notion of an either/or scenario between the two, the bank provides a more nuanced understanding of how investors diversify their portfolios.
In other BTC-related news, Benchmark’s report highlights Bitcoin miner Bitdeer Technologies as undervalued with significant growth potential.
Having completed a Master’s degree in Economics, Politics, and Cultures of the East Asia region, Aaron has written scientific papers analyzing the differences between Western and Collective forms of capitalism in the post-World War II era.
With close to a decade of experience in the FinTech industry, Aaron understands all of the biggest issues and struggles that crypto enthusiasts face. He’s a passionate analyst who is concerned with data-driven and fact-based content, as well as that which speaks to both Web3 natives and industry newcomers.
Aaron is the go-to person for everything and anything related to digital currencies. With a huge passion for blockchain & Web3 education, Aaron strives to transform the space as we know it, and make it more approachable to complete beginners.
Aaron has been quoted by multiple established outlets, and is a published author himself. Even during his free time, he enjoys researching the market trends, and looking for the next supernova.
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