Bitcoin continues to attract the attention of investors, especially when it comes to institutions.
Many are finally beginning to see it as an alternative to gold.
Today, however, the price of Bitcoin indicates that the coin is approaching the overbought level.
The potential of Bitcoin (BTC) followed the world’s largest currency from the moment it was introduced. While this was immediately clear to crypto users in retail stores, it took much longer for institutions to be convinced. But now they are finally buying BTC on a massive scale.
Bitcoin as an alternative to gold
When Bitcoin emerged, it seemed to be a promising decentralized payment system. However, as the crypto industry grew, people began to think that this “digital gold” might one day even replace the real gold.
While this is still far from actually happening, the idea has spread and now even institutional investors are beginning to see this possibility.
Grayscale Investment’s Bitcoin Trust, for example, outperformed gold ETFs because of this new interest. According to JPMorgan, many who previously invested in gold based products are now turning to BTC.
Analysts believe that this increase in confidence in the GBTC is a clear sign that demand for Bitcoin is also coming from large institutions, not just the younger generation who have been particularly optimistic about new technologies.
Bitcoin is approaching dangerous levels
JPMorgan reiterated its earlier statement about the potential long-term upside of BTC and noted that it is quite significant. Bitcoin is, according to the Bank, an alternative currency to gold, although its market capitalization would still need to be 10 times larger to match private sector investment in gold through bars, coins and ETFs.
However, JPMorgan also issued a warning to investors, pointing out that Bitcoin may be approaching overbought levels due to a sharp rise in prices over the past seven days.
In other words, as institutional investors develop an ever-growing interest in BTC, they must also remember to remain cautious. Bitcoin is still not nearly as stable as many would like to believe. As such, it is both an opportunity and a risk.