Several factors contributed to bitcoin’s rise above $ 55,000 this week, and their maintenance will support further growth, analysts at JPMorgan Bank say.
Throughout the first half of the summer, as Bitcoin declined from the highs, JPMorgan analysts warned of the disappearance of institutional interest, and with the beginning of the market recovery in July, they shifted their attention to the risks of excessive euphoria.
“Increasing the share of bitcoin is a healthy development as it is more likely to reflect institutional participation than an increase in the share of smaller cryptocurrencies,” the latest report said.
At the beginning of the month, JPMorgan analysts noted that ether futures are in the highest demand among institutional investors, while bitcoin derivatives have faded into the background. Commenting on the bias of preference back in favor of bitcoin, they write:
“Preferences appear to have been changing since the end of September along with a sharp recovery in bitcoin performance. This recovery is at least partly due to the covering of short positions, the liquidations of which have increased dramatically over the past week or two. «
JPMorgan names the following factors for the resumption of the rally in Bitcoin:
- Promises by the US authorities not to follow China’s example in banning cryptocurrencies;
- The proliferation of second-tier payment solutions such as the Lightning Network, along with Bitcoin acceptance in El Salvador;
- Renewed fears about inflation and the related increase in the demand for Bitcoin as a hedging tool. The attractiveness of bitcoin has increased due to the fact that gold in this regard did not support investor expectations and over the past weeks has been more responsive to changes in real interest rates than to inflation.
“Renewed fears about inflation among investors have sparked an increase in interest in bitcoin as a hedging medium. Institutional investors appear to be returning to Bitcoin, seeing it as a better inflation hedge than gold. Preliminary signs that were seen during the previous shift in preference from gold to bitcoin during much of the fourth quarter of 2020 and early 2021 have begun to manifest themselves again in recent weeks, ”added JPMorgan analysts.