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One of the reasons the bank gave for the rise of BTC is tied to the assurance the SEC gave to investors that they would not be banning crypto in the US.
The recent turnaround in the crypto space has been attributed to institutional investors who had earlier pitched their tent with gold but are now buying Bitcoin again, according to a recent report from JPMorgan.
JPMorgan cited three reasons why it believes Bitcoin has been able to reclaim its $55k level again. The experts wrote:
“Institutional investors appear to be returning to Bitcoin, perhaps seeing it as a better inflation hedge than gold.”
According to the bank, the money flow between both assets BTC and gold is an indication of the growing appetite of institutional investors in crypto. It continued that, in this year alone, gold ETFs have seen an outflow in excess of over $10 billion while Bitcoin funds have had an inflow over $20 billion. This alone has played a part in increasing Bitcoin market share amongst other crypto assets.
In the words of the bank analysts, “the increase in the share of bitcoin is a healthy development as it is more likely to reflect institutional participation than smaller cryptocurrencies.”
Apart from that, concerns about rising inflation has made investors see BTC as a better hedge against inflation than gold. Available data has shown that the flagship asset upon still being miles off its ATH has performed better than the precious metal. In its year-to-data analysis, BTC is up by 86 percent while gold is 7 percent down.
Another reason the bank gave for the rise of BTC was tied to the assurance Gary Gensler-led Securities and Exchange Commission (SEC) gave to investors that they would not be banning crypto in the US.
The foremost bank wrote, “the recent assurances by US policymakers that there is no intention to follow China’s steps towards banning the usage or mining of cryptocurrencies.”
You’ll recall that China recently banned all crypto-related transactions within its jurisdiction. However, many crypto enthusiasts have urged the United States to take this as a sign on why it should take the forefront in the coming crypto revolution.
“The recent rise of the Lightning Network and 2nd layer payments solutions helped by El Salvador’s bitcoin adoption,” experts explained.
Following the legitimization of the BTC as a legal tender in El Salvador, the country’s government has been working round the clock to make the adoption seamless and has also made several attempts to incentivize its use amongst the citizens.
Just recently, the country announced a discount on petroleum purchased via the country’s official Bitcoin wallet, Chivo.
As of press time, Bitcoin has touched above $56,000.