JPMorgan Chase analysts claimed that “bitcoin has taken the bulk of the market share of gold and will continue to do so in the near future.” Highlighting the diminishing difference in funds allocated to gold and BTC, analysts said the move will continue with billions of cash transfers.
The cryptocurrency community has been arguing for years over the narrative that Bitcoin is the digital representation of gold. After all, both have important common features such as limited supply and have a hedging role.
Bitcoin and gold are likened due to their limited supply
Analysts predict that institutional investors will gain the upper hand of Bitcoin over gold, understand the digital scarcity and move away from gold.
Until now, 2020 has been a year of significant corporate money inflows in Bitcoin. The growing excitement is fueled by the ever-growing reports of Grayscale, as well as the inclusion of famous names like Paul Tudor Jones and Stan Druckenmiller.
The trend may gain momentum and the price of gold may be affected
JPM analysts also claimed that Bitcoin accounts for only 0.18% of family office assets, while gold ETFs receive about 3.3%. Despite this huge difference between the two percentage of assets, Panigirtzoglou believes the trend is beginning to change. This shift can damage the gold price in the long run.
Bitcoin adoption by institutional investors has just begun. For gold, this adoption is well advanced. If this medium and long term thesis is justified, the gold price will suffer from structural fluctuations in the coming years.