21.10.202116:59 Forex Analysis & Reviews: Crypto market news for October 21: JPMorgan says Bitcoin price hike is due to inflation concerns

Exchange Rates 21.10.2021 analysis

JPMorgan refutes popular opinion

As Bitcoin has continued to show another crazy growth, many analysts, investors, and traders have linked it to the launch of the first ETF and its listing on the New York Stock Exchange. However, JPMorgan analysts believe that the two events are completely unrelated. Beyond that, the ProShares ETF is unlikely to raise much money.

The investment bank believes that the reasons for the growth of the first cryptocurrency, as before, lie in the desire of investors to protect themselves from growing inflation. Growing all over the world and, in particular, in the USA. Note that the latest consumer price index in the U.S. rose to 5.4% in September and may continue to rise. Thus, investors see Bitcoin and other cryptocurrencies as a hedge against inflation.

Also, JPMorgan analysts noted that investors prefer bitcoin over gold. This is evidenced by the outflow of investments from the exchange-traded fund SPDR Gold Shares ETF of $3.5 billion over the past few months.

"By itself, the launch of BITO is unlikely to trigger a new phase of significantly more fresh capital entering bitcoin. Instead, we believe the perception of bitcoin as a better inflation hedge than gold is the main reason for the current upswing, triggering a shift away from gold ETFs into Bitcoin funds," JPMorgan said.

Assets managed by ProShares ETF rose to $1 billion

The Bitcoin ETF from ProShares, launched just a couple of days ago, has grown to $1 billion and broke the growth record previously held by the exchange-traded fund for gold. "If $BITO keeps up this pace of inflows it won't have any futures left to buy by the end of the month due to position limits," said Eric Balchunas, senior ETF analyst at Bloomberg.

Tesla loses $51 million from Bitcoin investments

U.S. electric carmaker Tesla, driven by the world-famous Elon Musk, has reported financial results for the third quarter of 2021. According to financial statements, Tesla's investment in the bitcoin cryptocurrency brought the company a loss of $51 million. However, there is no doubt that Tesla is already in profit at the current bitcoin rate. Most likely we are talking about coins purchased at the beginning of this year at an average rate of about $35,000. Thus, the third quarter results simply do not account for the current rise in bitcoin.

Experts cannot unequivocally advise buying bitcoin now

Given Bitcoin's update to its historic highs, many investors have a question whether it is worth continuing to buy cryptocurrency now. Analysts believe that there is no definite answer to this question. On the one hand, many forecasts speak of a further increase in bitcoin quotes with targets located around the $100,000 mark. On the other hand, Bitcoin is already at its all-time highs, and no one knows when large investors or most investors will start taking profits on long positions.

However, some experts still note the launch of a Bitcoin ETF, which indicates that SEC has adopted Bitcoin, and the scope of cryptocurrency and the availability of investing in it will only be wider and easier. Experts also note that now bitcoin will receive government regulation, which will protect investors from various fraudulent schemes. I would like to note that at this time, the impulsive upward trend continues its construction, and according to the wave analysis, Bitcoin can continue to grow with targets located around $75,000 and above.

*La presente analisi del mercato ha un carattere esclusivamente informativo e non rappresenta una guida per l`effettuazione di una transazione.

Chin Zhao,
Esperto analitico di InstaForex
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