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JPMorgan Chase: Bitcoin has ‘considerable upside’ as an alternative to gold

  • US banking giant JPMorgan Chase states in a report that the Grayscale Bitcoin Trust captures shares of the Gold ETF market.
  • Moreover, the long-term potential for Bitcoin is “considerable” if it competes more strongly with gold as an alternative currency.

Via Twitter, the CEO of Grayscale Investments pointed out that JPMorgan Chase, the largest U.S. bank by balance sheet total, has published a report examining the success story of the Grayscale Bitcoin Trust (GBTC). Once one of Bitcoin’s biggest critics, the bank recognizes in the report that demand for the leading cryptocurrency is affecting even the established markets.

JPMorgan Chase notes that demand for Bitcoin may eat away at that of Gold ETFs. According to the research, inflows into the Grayscale Bitcoin Trust in October were significantly higher than those of gold ETFs. The US bank therefore concludes that the GBTC may be able to capture some share of the market for gold ETFs.

What makes the October flow trajectory for the @Grayscale #Bitcoin Trust even more impressive is its contrast with the equivalent flow trajectory for #gold ETFs, which overall saw modest outflows since mid-October.

This contrast supports the idea that some investors who have previously invested in #Gold ETFs, such as family offices, might consider #Bitcoin as an alternative to gold.

The endorsement of Bitcoin as a reserve currency by companies such as MicroStrategy and Square, and in particular the announcement of PayPal, have further boosted demand for Bitcoin. This, the banking giant said, is particularly evident in the Grayscale Bitcoin Trust, “whose inflows have been steepening in recent weeks”.

According to JPMorgan Chase, the rise of the Grayscale Bitcoin Trust suggests that not only millennials are driving demand for Bitcoin, but also institutional investors such as family offices and asset managers:

In our opinion,the ascendof Grayscale Bitcoin Trust suggests that bitcoindemand is not only driven by the younger cohorts ofretail investors, i.e. millennials, but also institutionalinvestors such as family offices and asset managers.

These institutional investors appear to be the biggestinvestors in the Grayscale Bitcoin Trust perhapsreflecting their preference to invest in bitcoin in fundformat.

Meanwhile, the bullish report crowns another record week for the US asset management firm. As Sonnenshein announced on Saturday, his company recorded the largest growth for all its products in a week:

What an INCREDIBLE *week* at @Grayscale

(i) LARGEST asset raise across products EVER $237mm+
(ii) LARGEST asset raise EVER for
$ETH Trust $58mm+
(iii) YTD inflows quickly approaching $3,000,000,000
(iv) AUM has now surpassed $9.1B

…and we’re *just* getting started!

Bitcoin has “considerable potential” – JPMorgan Chase

The experts at JPMorgan Chase also noted that “the potential long-term upside for bitcoin is considerable if it competes more intensely with gold as an ‘alternative’ currency given that the market cap of bitcoin would have to rise 10 times from here to match the total private sector investment in gold via ETFs or bars and coins.”

However, the analysts also noted that the “sharp rise in prices this week seems to have brought Bitcoin close to overbought levels”, which could trigger a sell-off:

Momentum traders have also amplified the recent bitcoin rally. Thesharp spike in prices this week appears to have taken bitcoin close tooverbought levels on our momentum signal framework, something thatcould potential trigger profit taking or mean reversion flows.

About Author

Jake Simmons

Jake Simmons has been a crypto enthusiast since 2016, and since hearing about Bitcoin and blockchain technology, he's been involved with the subject every day. Beyond cryptocurrencies, Jake studied computer science and worked for 2 years for a startup in the blockchain sector. At CNF he is responsible for technical issues. His goal is to make the world aware of cryptocurrencies in a simple and understandable way.

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