Gold and Bitcoin are often resembled to entail similar properties. While gold continues to reign the investment side of many, Bitcoin seems to be catching up. Both the assets have been looked upon as a store of value assets, which has even led to Bitcoin being called “digital gold.” However, a dilemma pertaining to the future of gold has been addressed by analysts at JPMorgan Chase.
Gold Vs Bitcoin
Bitcoin transpired to become a valuable yet controversial asset. The regulations that have been hindering the growth of the king coin seem to have taken a break following Bitcoin’s notable price change. The emergence of Bitcoin from a mere darknet currency to one of the most valuable assets in the globe has put the fate of gold at stake. Nikolaos Panigirtzoglou, a quantitative strategist at JPMorgan Chase & Co., along with a few other strategists pointed out that people were steering towards Bitcoin as a significant amount of money was taken out of gold reserves and found shelter at Bitcoin since October.
These strategists further added that this trend would prolong over the course of time. This wasn’t limited to gold and Bitcoin alone as several institutional investors are bound to take a position in crypto assets. Elaborating on the same, the strategists cited that river $2 billion worth of inflows were seen by the Grayscale Bitcoin Trust. The outflows for exchange-traded funds backed by gold were a whopping $7 billion. The JPMorgan strategists further added,
“The adoption of bitcoin by institutional investors has only begun, while for gold its adoption by institutional investors is very advanced.”
Gold has been the investors’ favorite for the longest time now. This traditional store of value asset seems to be getting a run for its money by Bitcoin. Another classic example of how digitalization is forcing several to pull the plug on traditional assets.
The banking giant further revealed that only the king coin accounts for only 0.18% of family office assets as opposed to the 3.3% gold ETFs. Despite this, the gold seems to be safe in the short term as gold is still longing for a recovery. Shedding light on the longer term, the strategists 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.”