Bitcoin Surpasses Gold in Investor Portfolios: JPMorgan

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As reported by a JPMorgan analyst, Bitcoin has surged past gold in terms of investor portfolio allocation, taking volatility into account. 

Specifically, Bitcoin’s allocation is 3.7 times greater than that of gold. Additionally, they pointed out a net inflow of $9 billion into Bitcoin ETFs since their inception, which offsets outflows from Grayscale.

Crypto Market Surges 40% as Spot Bitcoin ETFs Attract $10 Billion

Nikolaos Panigirtzoglou, managing director at JPMorgan, revealedthat, when adjusted for volatility, Bitcoin allocation in investor portfolios now exceeds gold by 3.7 times. 

❖ Bitcoin has already surpassed gold in investor portfolio allocation: JPMorgan

JPMorgan managing director Nikolaos Panigirtzoglou said that, when adjusting for volatility, Bitcoin's allocation in investor portfolios has already outpaced that of gold. Specifically, the flagship…

— *Walter Bloomberg (@DeItaone) March 15, 2024

The analyst highlighted the accelerated inflows of over $10 billion into spot Bitcoin exchange-traded funds (ETFs) since their approval in January and claimed the potential BTC ETF market size could reach $62 billion, using gold as a benchmark. 

Another report from JPM Securities predicts that the spot Bitcoin ETF market could expand to as much as $220 billion in the next two to three years, projecting a substantial impact on Bitcoin’s price due to increased capital inflows.

The approval of BTC ETFs has already positively affected the crypto market. In the past month, the total market capitalization soared by nearly 40% to $2.2 trillion. Bitcoin and Ethereum were the primary drivers, increasing by 45% and 47% respectively.

Altcoins also benefited, experiencing double-digit gains, alongside further growth in the decentralized finance (DeFi) and non-fungible token (NFT) sectors.

Spot Bitcoin ETFs saw a notable increase in net sales, reaching $6.1 billion in February compared to $1.5 billion in January. On top of this, BTC surged by 31% in a month, reaching an all-time high of over $73,800 – a rise that coincided with inflows into spot BTC ETFs. Crypto mining stocks mirrored this trend, also reaching new record highs in February.

Spot Bitcoin ETFs Expected to Grow: Analyst Projections See $62 Billion Market Within 3 Years

Early this month, JPMorgan analysts estimated that only 7% ($230 billion) of the $3.3 trillion global investment in gold is held in funds, with the remaining portion stored in bars and coins.

Drawing a parallel with the gold market, analysts applied a volatility ratio of 3.7 to project a potential size of $62 billion for the spot BTC ETF market within the next two to three years. This figure, however, might primarily reflect a shift of existing investments from other instruments towards ETFs rather than entirely new capital entering the market.

Since their launch, spot Bitcoin ETFs (excluding Grayscale Bitcoin Trust) have already attracted $19 billion in cumulative inflows, representing nearly half of the $36 billion rotational shift anticipated by JPMorgan for the entirety of 2024. Accounting for the $10 billion outflow from GBTC, net inflows into spot Bitcoin ETFs remain at an impressive $9 billion.

Notably, net sales for spot BTC ETFs also saw a significant climb, reaching $6.1 billion in February, compared to $1.5 billion in January. The largest daily inflows to the spot Bitcoin ETFs hit a peak of over $1 billion on March 12, with analysts speculating that this figure could rise further once outflows from the Grayscale Bitcoin Trust ETF cease.

Bears can't win this game until spot #Bitcoin ETF inflow stops.

Last week, spot ETFs saw netflows of +30K BTC. Known entities like exchanges and miners hold around 3M BTC, including 1.5M BTC by US entities.

At this rate, we'll see a sell-side liquidity crisis within 6 months. pic.twitter.com/qwAbZJwSOl

— Ki Young Ju (@ki_young_ju) March 12, 2024

With the Bitcoin halving just over a month away, predictions abound regarding the potential for heightened demand and a supply crisis within the next six months. Ki Young Ju, CEO of crypto-analytic firm CryptoQuant, foresees this development as fuel for increased demand.

After a prolonged crypto winter lasting nearly three years, the approval of spot Bitcoin ETFs has acted as a catalyst for BTC’s renewed positive price action, propelling it beyond the all-time high of the last bull cycle, exceeding $69,000. This has also opened the doors to institutional adoption, led by the world’s largest asset manager, BlackRock.  

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