JPMorgan stated that cryptocurrencies are “considered as the worst hedging product in the sharp decline of stocks, and its diversification gains are doubtful.” He said investors can invest 1% of their portfolio in cryptocurrencies. . The company’s strategist explained that this can help “achieve any efficiency gains in the overall risk-adjusted return of the investment portfolio.”
JPMorgan Chase stated that investors can allocate 1% of their portfolio to Bitcoin
JPMorgan Chase now sees the benefits of adding a small amount of Bitcoin to a multi-asset portfolio. Zhang Jinghe, the company’s global research leader, and He Meimei, vice president of strategic research, wrote in a report to clients on Wednesday:
In a multi-asset portfolio, investors may increase the sum of their distribution to 1% of the cryptocurrency in order to obtain any efficiency gains in the overall risk-adjusted return of the portfolio.
However, the strategist clarified: “Cryptocurrency is an investment tool, not a currency for funding. Therefore, when seeking to use currency to hedge macro events, we recommend using currencies such as the yen or the U.S. dollar to hedge.”
Although many analysts believe that Bitcoin is a way of hedging major fluctuations in traditional asset classes, including stocks, bonds, and commodities, JPMorgan Chase is skeptical. Until last week, the investment bank declared that Bitcoin is an “economic show” and added:
Encrypted assets are still the worst hedging product in which stocks have shrunk significantly. Their prices are currently much higher than production costs, and their diversification benefits are doubtful. With the mainstreaming of cryptocurrency ownership, they are related to cyclical assets Sex is also on the rise.
JPMorgan Chase also stated that the recent bitcoin price is much higher than the fair value estimate of cryptocurrencies. The company further asserted that mainstream adoption will increase the correlation between Bitcoin and cyclical assets, which will rise or fall as the economy changes. This reduces the benefits of Bitcoin portfolio diversification. However, its latest report suggests that investors can add a small portion of Bitcoin to their investment portfolio.
This investment bank has come a long way since its CEO Jamie Dimon called cryptocurrency a fraud in September 2017.Earlier this month, Daniel Pinto, co-president of JPMorgan, stated that he was convinced that the demand for Bitcoin “will be [there] At a certain point. The executive confirmed: “If an asset class develops over time for use by different asset managers and investors, we will have to participate in it. In addition, the company’s analysts predict that as the competition between cryptocurrencies and gold intensifies, the price of Bitcoin may reach $146,000.
What do you think of JP Morgan Chase’s view on Bitcoin? Let us know in the comments section below.
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