A woman uses a Bitcoin ATM in a safe cage in Barcelona, Spain, on January 29, 2021.
Cesc Maymo | Getty Images
JPMorgan stated that Bitcoin is an “economic show” and financial technology innovation will dominate financial services.
Analysts at the bank said that despite Bitcoin̵
JP Morgan Chase stated in a research report last week: “As Tesla, New York Mellon Bank and MasterCard announce more acceptance of cryptocurrencies, the price of Bitcoin continues to rise rapidly.”
“But with the rise of online start-ups and the expansion of digital platforms into credit and payment, fintech innovation and the growth in demand for digital services are the true story of Covid-19.”
Bitcoin has gained traction among major Wall Street banks and Fortune 500 companies, and this development has driven its price up, reaching a market value of $1 trillion last week.
Investors have compared Bitcoin and gold. Due to the limited supply, the former regards Bitcoin as a new digital store of value and limits the total number of Bitcoins that will ever exist to 21 million.
JPMorgan Chase’s own strategists say that Bitcoin may compete with gold as a potential hedge against inflation in the coronavirus crisis, and may rise up to $146,000.
Nevertheless, skeptics still do not believe it. Economists like Nouriel Roubini say that Bitcoin and other cryptocurrencies have no intrinsic value. A recent survey by Deutsche Bank showed that investors view Bitcoin as the most extreme bubble in the financial market.
JPMorgan Chase’s strategists stated that unless the volatility of cryptocurrencies decreases, the current Bitcoin price seems “unsustainable”. They added a price target of $146,000, depending on the “volatility of Bitcoin and the volatility of gold”, which may take several years.
Analysts at JPMorgan said that at the same time, cryptocurrencies have “suspicious diversification gains” and are seen as the “worst hedge” against a sharp drop in stock prices.
JPMorgan Chase has been promoting the development of blockchain technology through its own cryptocurrency JPM Coin and a new business unit Onyx.
JPMorgan Chase believes that the rise of digital finance and the demand for financial technology alternatives are “the true financial transformation story of the Covid-19 era.”
The bank said: “Competition between banks and financial technology is intensifying. Because big technology has the ability to access customer data, it has the most powerful digital platform.”
“The’competition’ between the financial industry and the technology industry is just around the corner. Banks are increasing investment to narrow the technology gap, and the struggle between U.S. banks and the non-banking financial industry is also unfolding on the regulatory front.”
Large technology companies such as Apple and Google have recently shown increasing interest in financial services. Apple partnered with Goldman Sachs to launch its own credit card, and Google (Google) allowed its users to open checking accounts after partnering with Citigroup.
JPMorgan Chase stated: “Traditional banks may become the ultimate winner in the digital banking era due to their advantages in deposit franchising, risk management and supervision.”
In the era of coronavirus, the digital banking industry is booming, and large banks and fintech companies have also seen a surge in adoption rates as people spend more time at home due to public health restrictions.