FX.co ★ Bitcoin's Historic Peak Fueled by Inflation, not ETFs, says JPMorgan

JPMorgan strategists believe that inflation was the most likely reason for Bitcoin's rapid growth to a new all-time high on Wednesday, rather than the launch of ProShares' Bitcoin ETF BITO on NYSE Fidelity on October 19. This means that bitcoin is growing due to access to funds, Tressis chief economist Daniel Lacalle commented Wednesday.

Nikolaos Panigirtzoglou and other bank strategists wrote that the ETF launch is unlikely to attract much new capital to the main cryptocurrency. Rather, the reason, they say, is that investors see bitcoin as a better hedge against inflation than gold. Since the beginning of September, there has been an active movement of funds from gold ETFs to the main cryptocurrency.

Declining Interest in Gold and the Fading Hype around Bitcoin ETFs

According to JPMorgan experts, gold has recently been losing investor confidence due to doubts about its ability to withstand inflation. Investors are increasingly dumping gold in order to buy more bitcoins.

An example of this is the $56 billion SPDR Gold Shares ETF (GLD), which has faced massive outflows in the past few months and has already lost $3.6 billion, according to Bloomberg.

JPMorgan noted that in addition to BITO, investors can buy a wide variety of products. The Purpose Bitcoin ETF (BTCC) is one of them. The bank's strategists argue that BTCC also had a very good start, but then the hype died down. So, they said, the same could happen to BITO one week after launch.

Influential Investors Support This Idea

Billionaire investor Paul Tudor Jones has also previously stated that in the current economic climate, Bitcoin is winning the race against gold. More and more investors are choosing digital currency as a defense against inflation, rather than precious metals.

He added that the world is entering the digitization stage, and therefore digital gold is outperforming the physical version.

Regarding the Bitcoin ETF launched by ProShares, Jones stated that he himself prefers to own physical bitcoins rather than buying in ETFs.

So what are the prospects for Bitcoin now?

The historical maximum for the main cryptocurrency has been broken and this is already good. But now the main thing for the price is to consolidate above this mark. On Tuesday, Bitcoin reached the resistance of 67,044.68 (100 by Fibo Expansion) but was unable to break it. By the time of writing the review, the main cryptocurrency has again approached this border. The breakout of the level of 67,044.68 and consolidation above will open the way for BTCUSD to the next target of 72,240.60 (161.8 by Fibo Expansion).

In the meantime, from a technical point of view, it's too early to exhale. For some time, the main cryptocurrency may continue to consolidate in the range of 62,000-67,000 dollars per bitcoin. But if it doesn't come out of it down, it's already good.

As for growth catalysts, IMHO, it is not so important now whether it was inflation or the launch of the first ETF. Even if JPMorgan is right, the story of inflation is also long-running, and this driver will push large capital into bitcoin for a long time. And launching an ETF will help in this, opening up more opportunities. Therefore, both catalysts are more likely to work in synergy for the continuation of the bull market.