The growth of traditional forms of trading entering the Bitcoin market has often been associated with a maturing market. Financial reports from different corporate-grade institutions that deal with the institutional clientele indicate a major interest from investors as they continue to look for alternative investments in this tricky financial time.
A research note from banking giant JPMorgan voices similar opinions, stating that Institutional investors might be more inclined towards Bitcoin when it comes to investing in an alternative to Gold.
In the research note published Friday, JPMorgan analysts state that Grayscale’s bitcoin trust saw more cumulative inflows through October compared to gold exchange-traded funds (ETFs) which saw “modest outflows” since mid-October.
An ETF is a financial derivative that lets investors bet on the underlying asset without actually owning it. This is quite a popular investment vehicle for institutional investors or entities with a net worth of more than $1 – $5 million.
While Grayscale’s Bitcoin Trust is not an ETF, but it serves a similar purpose but in a virtual manner just like trading any U.S. security virtually. Recent conditions were the first time where Bitcoin and Gold were on a level playing field, and investors got to chose between both the assets. The results speak for themselves.
“This contrast lends support to the idea that some investors that previously invested in gold ETFs such as family offices, maybe looking at bitcoin as an alternative to gold,” said the analysts noted.
The report continued that over the long-term, Bitcoin has a “considerable” upside if it continues to compete “more intensely with gold as an ‘alternative’ currency.'” Further adding that it’s still a long way to go as Bitcoin’s market cap would have to rise ten folds from present levels “to match the total private sector investment in gold ETFs or bars and coins.”
Corona Virus fuelled Bitcoin demand
The Covid-19 pandemic has a major factor that affected the shift from gold to Bitcoin. A recent study carried out by Grayscale reveals that out of 1000 United States-based consumers, 55% of investors indicated were interested in investing in Bitcoin. This is a significant rise in percentage from the 36% that admitted interest in the cryptocurrency last year.
Grayscale also reported its third consecutive record-breaking quarter last month. Per its investment report for Q3 of 2020, a total of $1.05 bln was raised which is the largest quarterly inflow that the company has ever seen.
As a result, Grayscale’s investment in the year-to-date has surpassed $2.4 billion, which it claims is more than double its $1.2 billion inflow over a six-year period from 2013 to 2019.