NEW YORK: Inflation concerns rather than exuberance about the first US bitcoin futures exchange-traded fund (ETF) is driving the digital currency to record highs, according to JPMorgan Chase & Co strategists.

       “By itself, the launch of BITO is unlikely to trigger a new phase of significantly more fresh capital entering bitcoin,” wrote strategists including Nikolaos Panigirtzoglou, referring to the ProShares Bitcoin Strategy ETF.

       “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 since September.”

       Growing concerns over inflation have renewed investors’ interests in assets that can act as a hedge – and that includes bitcoin.

       Gold has failed in recent weeks to respond to heightened concerns over rising cost pressures, and the shift away from gold ETFs into bitcoin funds has gathered pace.

       “This flow shift remains intact supporting a bullish outlook for Bitcoin into year-end,” the strategists said.

       Take for instance the US$56bil (RM232.8bil) SPDR Gold Shares ETF, which is on pace to see its fourth straight month of outflows that so far total more than US$3.6bil (RM14.9bil) that span, according to data compiled by Bloomberg.

       Meanwhile, bitcoin investors already have a “multitude of investment choices,” JPMorgan said.

       The bank’s strategists point to the launch of the Purpose Bitcoin ETF in Canada, which saw a warm reception at first that then slowly waned.

       “The initial hype with BITO could fade after a week,” they said.

       Bitcoin reached a milestone on Wednesday when it crossed above US$66,000 (RM274,000) for the first time. — Bloomberg