After years in the downturn market, El Salvador's Bitcoin holding has risen to a 3% gain over its investment.
According to JPMorgan Chase financial analysts, as Bitcoin becomes gains more widespread adoption, gold will take a backseat as an alternative hedge asset. As the two asset classes compete for market share, the analysts believe Bitcoin will begin to outperform gold and gain the attention of new and long-term investors.
Strategies such as Nikolaos Panigirtzoglou foresee that the gap between the two assets will narrow and that Bitcoin will overtake gold in time for market volume.
As reported by Bloomberg, the strategists commented on the market, saying:
“The adoption of Bitcoin by institutional investors has only begun, while for gold, its adoption by institutional investors is very advanced. If this medium to longer-term thesis proves right, the price of gold would suffer from a structural headwind over the coming years.”
According to the data and the expert opinion, this major shift is likely going to be as a result of institutional investment and adoption from financial firms and payments platforms. Grayscale’s rapid rise to buy Bitcoin and Ethereum to add to its assets under management and trusts has shaken the market leading to a surge in interest from other investors. PayPal’s support for cryptocurrency purchase also stands as a significant move; guiding new investors towards Bitcoin.
With more convenience and less caution, the market for cryptocurrency has entered a level of ease previously unseen. While new investors and large-scale whales have been adding Bitcoin to their portfolios, gold has not taken a tumble just yet. The analysts believe that the needle will shift from gold to cryptocurrency when Bitcoin represents billions of dollars transferred. This won’t be a short-term trend, according to JPMorgan, but more likely a medium to longer-term prospect:
“If this medium to longer-term thesis proves right, the price of gold would suffer from a structural flow headwind over the coming years.”