JPMorgan: BTC Can’t Diversify Portfolios As We Think

JPMorgan continues to talk about bitcoin as of late. Analysts from the financial giant recently claimed that if it did not sting back to $ 40,000 soon, traders would likely see their portfolios decline and their periods likely to suffer great suffering. With a recent drop of $ 9,000 per asset always reaching its new highest, one has to wonder if it will take time before BTC jumps into $ 40,000 territory again.

JPMorgan: Bitcoin is not as strong as we think

Now JPMorgan claims that digital currency is not the best way to diversify someone’s portfolio. They claim that bitcoin’s recent outlook serving as a hedging tool is not entirely true, and in the past, it has not done well in rolling out the effects of drooping assets.

Ever since the coronavirus pandemic began to beat the world financial markets, bitcoin and cryptocurrencies have taken new forms. Formerly bitcoin, for example, was nothing but a speculative asset; something that was enterprising, but that could make a person rich overnight if he played his cards correctly.

However, with the introduction of COVID-19, many people are seeing bitcoin in a completely new light. They consider it an asset that could potentially keep their portfolios straight and safe in times of economic strife. As a result of this new respect, the asset has pivoted into hard-core five-figure territory, and many analysts believe the asset could see a six-figure territory of $ 100,000 or more before ‘ the year ends.

But JPMorgan doesn’t quite agree. In a recent report, the finance company says that the asset continues to be popular with retail investors and claims that is why bitcoin is still heavily tied to “recurring assets.” So, big sales and dips aren’t likely to disappear from bitcoin’s future anytime soon.

John Normand and Federico Manicardi – analysts with the company – wrote in the report that bitcoin was “the least trusted hedge during times of acute market stress.” They also said that while they can understand why investors would be so interested in it, bitcoin is unlikely to behave as a “traditional defensive asset” at any point in the future.

They write:

Mainstreaming crypto ownership raises correlation with recurring assets, possibly converting them from insurance to leverage.

They also noted that while the asset has been in low correlation with precious metals and fiat in previous years, in recent days it is moving more alongside standard investment equipment, and is therefore unlikely to achieve the diversification that many traders believe wills.

Analysts say:

If sustained, this development could erode the value of diversification over time.

Biggest Surge in Financial History?

Yet their feeling was not all that negative. The report concludes with:

Whether cryptocurrencies are ultimately judged to be a financial innovation or a speculative bubble, bitcoin has already achieved the fastest price appreciation ever of any asset it must have.

Tags: bitcoin, hedge widget, JPMorgan