JPMorgan Chase & Co strategists said that recent influxes of institutional investors into the crypto sphere may signify that big money is slowly but surely moving into Bitcoin—and out of gold—Bloomberg reported today.
“The adoption of bitcoin by institutional investors has only begun, while for gold its adoption by institutional investors is very advanced,” said JPMorgan quantitative strategist Nikolaos Panigirtzoglou.
The bank expects to see some big changes in institutional investors’ preferences over the coming years. Since October, investments in the Grayscale Bitcoin Trust, for example, increased by $2 billion while gold-backed, exchange-traded funds (ETF) saw an outflow of $7 billion during the same time period, JPMorgan’s data shows.
Big money is flowing out of gold and into Bitcoin. Image: Bloomberg
Yesterday, Grayscale also announced that it has more than $12 billion worth of digital assets under its management—and Bitcoin comprises roughly $10.4 billion of it.
12/08/20 UPDATE: Net Assets Under Management, Holdings per Share, and Market Price per Share for our Investment Products.
Some investors have already come out in favor of Bitcoin. Global Macro Investor CEO Raoul Pal recently swapped his portfolio of liquid assets, which was 25% gold, 25% Bitcoin and 25% cash, to one that was 98% cryptocurrency (and a few bonds left over). He invested his personal wealth in Bitcoin and Ethereum at an 80:20 split.
Financial TV company Real Vision invested 10% of its cash holdings in Bitcoin around three months ago, according to CEO Raoul Pal.
It joins a growing list of companies that have directly invested in Bitcoin, including business intelligence firm MicroStrategy and payments company Square. According to BitcoinTreasuries, these firms in total hold 243,000 Bitcoin, worth a total of $4.5 billion.
“We think it’s a good way to hold excess cash. It’s not like I haven’t done the work on it, I’ve been inv...
Currently, only 0.18% of family office assets are held in Bitcoin—compared to 3.3% in gold ETFs—but even the slightest movement in this distribution would translate into billions of dollars being transferred.
“Gold has long been a staple strategic asset in the allocations of institutional investors, commonly used for portfolio hedging across the board. With an American economy severely undermined by the Covid-19 health crisis, and roughly 22% of all USD ever issued printed in a single year, assets like gold, and more importantly, Bitcoin, have dramatically increased in value,” Lior Messika, founder and managing partner at Eden Block, told Decrypt earlier.
And since Bitcoin has a lot of gold’s features and lacks many of its flaws, such migration of capital could potentially hurt the precious metal in the long-term perspective.
“If this medium to longer term thesis proves right, the price of gold would suffer from a structural flow headwind over the coming years,” JPMorgan’s strategists noted.
Articles like this one should make any wise investor sell #Bitcoin and buy #gold. Even long-term Bitcoin bulls should be taking profits on Bitcoin now and buying more gold. https://t.co/phcRDu45VV
As expected, Peter Schiff, CEO of Euro Pacific, disagrees. While referring to a similar article about Bitcoin eating gold’s market cap, he said, “Articles like this one should make any wise investor sell #Bitcoin and buy #gold. Even long-term Bitcoin bulls should be taking profits on Bitcoin now and buying more gold.”
Daily Debrief Newsletter
Start every day with the top news stories right now, plus original features, a podcast, videos and more.
The UK’s Economic Secretary for the Treasury has poured cold water on the idea of the country launching a national crypto reserve. Speaking at the Financial Times Digital Asset Summit in London, Emma Reynolds MP said that following the U.S. government's lead in stockpiling Bitcoin is “not the plan for us.”
“We don't think that's appropriate for our market," Reynolds said. “We understand that’s what the U.S. is going for, but that’s not the plan for us," she added.
In other areas, the UK is look...
OpenAI is removing limits on how much money investors can make while keeping its nonprofit in charge, converting its current business arm into a "public benefit company," a type of for-profit business that needs to consider both making money and serving the public good.
"We want to be able to operate and get resources in such a way that we can make our services broadly available to all of humanity," CEO Sam Altman stated in a letter published Monday.
The move places it at temporary odds with maj...
Riot Platforms sold $38.8 million worth of Bitcoin in April, as the second-largest publicly traded Bitcoin miner by market capitalization moves to shore up liquidity amid tightening margins across the mining sector.
The Castle Rock, Colo.–based firm offloaded 475 BTC last month at an average price of $81,731 per coin, according to its operations update on Monday.
Riot mined 463 of those tokens in April, with the remaining 12 drawn from reserves. The company retained 19,211 BTC on its balance sh...