According to Bloomberg, analysts at JPMorgan Chase & Co. predict that gold “will suffer for years because of Bitcoin”, as investors pull their funds out of the world-recognised safe-haven asset into the largest cryptocurrency in the market at present, placing their bets on the orange coin for the long run.
Analysts note that $2 billion USD in funds have moved into the Grayscale Bitcoin Trust, which can be used as an indication of investment inflows and outflows involving Bitcoin. In comparison, exchange-traded funds backed by gold have seen outflows of $7 billion in the same period.
“The adoption of bitcoin by institutional investors has only begun, while for gold its adoption by institutional investors is very advanced,” wrote JPMorgan strategists, which includes Nikolaos Panigirtzoglou, Managing Director at the bank. “If this medium to longer term thesis proves right, the price of gold would suffer from a structural flow headwind over the coming years.”
Currently, Bitcoin prices are in a consolidation phase after multiple weeks of new highs as it hovers around the $19,000 to $19,400 range. This presents a good window of opportunity for gold to recover some of its losses over the past two months.
Gold and Bitcoin prices have seen increasingly strong correlation this year, and plenty of traders often liken Bitcoin to gold, but experts have also pointed out that it is unlikely that Bitcoin and gold can co-exist on the same tier.
“It is dangerous to think that Gold & Bitcoin are similar & complementary investments. When the Bitcoin Dragon emerges from its lair, the first thing it will eat is the Kingdom of Gold,” MicroStrategy CEO Michael Saylor said in a tweet a month ago.
You may also want to read: MicroStrategy Aggressively Buying Bitcoin by Selling Debt Securities
