Big investors are switching out of bitcoin and into traditional gold as inflation fears heat up, JPMorgan says

Big investors are switching out of bitcoin and into traditional gold as inflation fears heat up, JPMorgan says

Institutional investors are switching out of bitcoin and are instead returning to gold, for the first time in six months, JPMorgan research analysts said in a note on Tuesday. A combination of rising inflation, tightening regulation and ripples running through the online crypto community after Elon Musk announced that Tesla would no longer be accepting bitcoin as a form of payment for environmental reasons have caused bitcoin's price to tumble in recent weeks. Since hitting a record high of almost $65,000 in mid-April the asset has lost around half its value to last trade around $35,470 on Wednesday. "The bitcoin flow picture continues to deteriorate and is pointing to continued retrenchment by institutional investors. Over the past month, bitcoin futures markets experienced their steepest and more sustained liquidation since the bitcoin ascent started last October," JPMorgan said. Momentum traders including crypto funds that have unwound assets recently are partially responsible for this, according to the research note. A key momentum indicator has therefore turned negative from a short term perspective, which could lead to more traders selling off their assets. In the longer term however, the momentum indicator is still positive. "It is perhaps too early to characterize bitcoin as