Bitcoin is replacing gold in investor portfolios

• Bitcoin now makes up a larger allocation of investor portfolios than gold, in volume-adjusted terms, JPMorgan reported.
• Investors have been piling into the crypto, sending its price to a new all-time high this week.
• The new bitcoin spot ETFs could hold $62 billion in the token within a few years.

By one measure, bitcoin is already more popular than gold within investor portfolios, boosted by the token’s new price highs, JPMorgan said in a note on Thursday.

The mainstay cryptocurrency has long drawn comparisons to the yellow metal, considered by some as a digital version of the commodity.

At face value, gold should make up a higher percentage of portfolios than bitcoin, given that an estimated $3.3 trillion is held for investment purposes. When comparing the two assets by notional amounts, bitcoin’s allocation would appear lower, given a market cap of $1.3 trillion, JPMorgan said. 

But bitcoin’s volumes are also 3.7 times higher than gold. When adjusting for this, JPMorgan found that bitcoin’s allocation is equal to gold at a price of $45,000.

“In other words, at $66k currently, the implied allocation to bitcoin within investors’ portfolios has already surpassed that of gold in vol adjusted terms,” the note said.

Bitcoin’s price has actually even jumped higher this week, surpassing its $69,000 all-time high, before paring gains. Gold also hit a new record, reaching as high as $2,155 on Friday.

Though both assets benefit from rising speculation that the interest rates could be cut this year, bitcoin is enjoying an added boost from the upcoming halving event and the recent emergence of bitcoin spot ETFs. 

According to JPMorgan, overall inflows into these funds now number $9 billion, though this may not all be fresh money. Using gold ETFs as a guide, bitcoin funds could eventually hold $62 billion.

“In our opinion, this is a realistic target of the potential size of spot bitcoin ETFs over time perhaps within a period of two to three years, though much of the implied net inflow could represent a continued rotational shift from existing instruments and venues to ETFs,” the analysts said.