JPMorgan Chase: Institutional investors may be dumping Bitcoin in favor of gold
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Odaily Translator | Nian Yin Si Tang
Summary:
Summary:
- Regulatory scrutiny and greater volatility are undercutting bitcoin as a portfolio hedge against gold.
- Analysts said the recent 30% plunge was a wake-up call for investors.
Bitcoin's one-day price swings of more than 30% at one point and the prospect of greater regulatory scrutiny mean the "shine" of bitcoin as a store of value to rival gold is fading.Elon Musk Criticizes Bitcoin's Energy Consumption,as well as,as well asChina reiterates its tough stance on cryptocurrencies
— that sent Bitcoin down 40% from its all-time high of over $63,000, panicking all but the most ardent supporters.Earlier this week, analysts at JP Morgan Chase reported in a report that open interest data on the Chicago Mercantile Exchange (CME) bitcoin futures contract showed that following the recent plunge in cryptocurrency prices across the market,Institutional Investors May Replace Bitcoin With Gold
. Bitcoin fell to nearly $30,000 a coin amid turmoil in the cryptocurrency market. While cryptocurrencies have taken a tumble, gold prices have risen more than 6% since the start of May. JPMorgan suggests that institutional investors are now dumping Bitcoin in favor of gold. Despite the sharp reversal in the price trend of Bitcoin, JPMorgan still believes that Bitcoin will rise to $140,000, which is a long-term theoretical target as previously expected."The sharp volatility in cryptocurrencies this week is a wake-up call," said Edward Moya, senior market analyst at trading platform Oanda Corp.tell bloomberg
Societe Generale analysts Alain Bokobza and Arthur Van Slooten spoke Thursday ina report“Bitcoin’s place in any investment portfolio is highly contested, which is not surprising given its erratic price swings,” wrote the paper.
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"Digital gold" hit hard
Proponents of the digital gold theory believe that Bitcoin has key characteristics of gold. What they most often point to is its supply cap. But bitcoin’s plunge this week means its 60-day realized volatility is now well above gold and rising. Wednesday (May 19) was a good example: Bitcoin slumped 31% on the day before recovering, closing the day close to its opening price, showing how volatile its price is.
Gold prices, meanwhile, have risen for three straight weeks, and analysts say the metal has even benefited from the collapse in the cryptocurrency market.
However, since the beginning of 2021, gold spot prices have fallen by more than 1%, while Bitcoin, despite its recent decline, has gained about 38% in a similar period.
According to these analysts, one of the biggest threats to Bitcoin is regulatory restrictions. On Thursday, the U.S. Treasury DepartmentAnnounceAnnounce
New measures to regulate the cryptocurrency market, proposing to report to the Internal Revenue Service (IRS) cryptocurrency transactions of more than $10,000. Companies that accept crypto-assets as payment for cash transfers should also report to the IRS transactions in which the fair market value of the crypto-asset exceeds $10,000, the Treasury Department said in a report on tax enforcement recommendations.
At the same time, commentators argue that cryptocurrencies as an asset class are still in their infancy and it is too early to compare them to other traditional assets. They point out that oil is also difficult to determine its value after it has been discovered.
