JPMorgan Names the Main Factor Behind Bitcoin’s Current Rally

Inflation fears, not hype around the first Bitcoin futures ETF, are driving the leading cryptocurrency to new price highs. JPMorgan analysts share that view, Bloomberg reports.

On October 19, trading in Bitcoin Strategy ETF on the New York Stock Exchange by ProShares began. The SEC for the first time approved such a bitcoin-futures-based exchange-traded product.

Trading volume of the fund under the ticker BITO on its debut day reached nearly $1 billion. By this metric, it ranked second among all ETFs.

On October 20, the price of the leading cryptocurrency hit an all-time high, surpassing $67,000.

However, JPMorgan strategists led by Nikolaos Panigirtzoglou argue that BITO’s launch alone is unlikely to trigger a new phase of substantial fresh capital inflows into Bitcoin.

“Instead, we believe that the perception of the first cryptocurrency as a better inflation hedge than gold is the primary driver of the current rally, triggering a shift from gold ETFs to Bitcoin funds starting in September,” they said.

“This shift will remain intact, sustaining an optimistic Bitcoin price outlook for the end of the year,” added JPMorgan experts.

Regarding market enthusiasm for BITO, analysts cited the first Bitcoin ETF in Canada as an example. Launched in February 2021, the product from Purpose Investments under the ticker BTCC was warmly received, but interest subsequently cooled.

“The initial hype around BITO could disappear within a week,” the experts suggested.

According to them, Bitcoin investors have “many options” for investments.

On October 21, it emerged that the SEC approved applications to launch two more Bitcoin futures ETFs — from VanEck and Valkyrie Investments.

Earlier, Tudor Investment founder Paul Tudor Jones called Bitcoin a hedge against inflation. The billionaire confirmed his view in an interview with CNBC, noting that Bitcoin currently outperforms gold in this regard.

Icahn Enterprises founder, billionaire Carl Icahn, has also assessed the defensive properties of digital gold against inflation.

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