Bitcoin (BTC) has experienced a rally of 15.09% in the last seven days as of writing, exceeding the $50,000 mark and bringing the market cap back to $1 trillion. The top performing cryptocurrency is currently priced at $54,848.
JPMorgan shared a note with clients explaining that Bitcoin’s recent increase is mainly due to institutional investors buying the cryptocurrency to hedge against inflation.
The analysts said that investors have started becoming interested in Bitcoin again as inflation re-emerges, seeing the crypto asset as a better inflation hedge in comparison to gold.
Aside from institutions, billionaire Kevin O’Leary declared that crypto takes up a huge chunk of his portfolio than gold does. The people of El Salvador — the first country to make Bitcoin legal tender — appear to share that same sentiment as President Nayib Bukele tweeted about the citizens buying more Bitcoins than spending them.
Previously in May, JPMorgan analysts have noted that major investors are turning in their Bitcoin for traditional gold instead. So, why are investors suddenly doing the opposite now?
JPMorgan believes that there are two other reasons behind Bitcoin’s current rally. One of them is the US legislators declaring that they do not have plans to ban crypto usage and mining like China does.
Besides that, JPMorgan have also attributed the rally to “the recent rise of the Lightning Network and 2nd layer payments helped by El Salvador’s Bitcoin adoption.”