Just a „side attraction“ – JPMorgan criticizes Bitcoin as overrated

With the renewed scolding, the analysts contradict their management, which considers a future investment in Bitcoin to be likely.

Analysts at the major investment bank JPMorgan Chase are again skeptical about Bitcoin Storm, classifying the actual value, i.e. the „fair value“, of the cryptocurrency much lower than the current record price shows.

In a circular to investors, JPMorgan argues that Bitcoin is only „a minor economic attraction“ compared to other innovations in financial technology

In addition, the market-leading crypto currency is probably the „poor means of protection against falling share prices,“ as Reuters reports on the analysts‘ assessments.

According to this, adoption by the mainstream would ensure that the correlation between Bitcoin and cyclical financial products, especially stocks, becomes stronger and stronger. This in turn would make the crypto market leader all the less attractive for diversification:

„Cryptocurrencies continue to be the worst hedge against sharp downturns in the stock market, because the questionable benefits of diversification are bought at a price that is well above the cost of production, while the correlation with cyclical financial products is increasing with the arrival of cryptocurrencies in the mainstream.“

In January 2021, the two JPMorgan analysts John Normand and Federico Manicardi had already asserted that Bitcoin itself is now becoming a cyclical financial product , which is why the crypto currency would no longer be suitable as a means of hedging against it

“Cyclical financial products” are generally understood to mean stocks whose price development depends on certain business cycles. Examples of this are the shares of companies in sectors such as catering, tourism and car manufacturing. As Cointelegraph had reported, it is still unclear whether Bitcoin can actually be classified as a cyclical financial product , because many experts see the crypto market leader as a good means of hedging the stock market, which would contradict this thesis.

The latest criticism from JPMorgan comes just days after Co-President Daniel Pinto confirmed that sooner or later the big investment bank would have to invest in Bitcoin. When Bitcoin was still at $ 13,000 in October 2020, JPMorgan even made the optimistic forecast that the price would double or triple in the long term. All the more surprising the renewed scolding.

At press time, Bitcoin is valued at $ 52,764, up more than 80% over the past 30 days. After the psychologically important 50,000 US dollar mark was cracked for the first time on February 16, the cryptocurrency even briefly jumped 53,000 US dollars today .

Financial expert: „Bitcoin investors are covidiotes with an understanding of a single cell“

According to the reading of the former risk analyst, Bitcoin „failed“.

In the past few days, Bitcoin ( BTC ) has also caused a stir in the media, because after the car maker Tesla made a massive investment of 1.5 billion US dollars in the crypto currency, its price suddenly swung towards US 50,000 -Dollars on.

Nassim Nicholas Taleb, a former risk analyst and financial expert, doesn’t share this optimism

„I’m selling my Bitcoin again,“ as Taleb wrote in a tweet yesterday . BNN Bloomberg also reports on the author’s criticism, who argues that „a currency should not fluctuate more violently in value than the goods you buy and sell with it“. To this end, he cynically adds:

“You can’t map goods prices in BTC. So in this respect it has failed (at least as of now). Bitcoin has meanwhile been taken over by Covidiotes who understand a single cell. „

Taleb’s argument is based on the function of Bitcoin as a currency or means of payment, which in his opinion does not exist. Many crypto experts admit this, but attest that the market-leading crypto currency has a function as a store of value. Some heads of the crypto industry as Roger Ver, the proven advocate of Bitcoin offshoot Bitcoin Cash ( BCH ) is, in turn, support the reading of Taleb, by hold on to it , that Bitcoin was originally conceived as a means of payment.

The notorious critic Peter Schiff also repeatedly fires against Bitcoin for similar reasons, although even large mainstream companies are now investing in the leading crypto currency

For example, Michael Saylor, CEO of the large software manufacturer MicroStrategy, is completely convinced that Bitcoin is suitable as a store of value, which is why he and his company are one of the pioneers in investing in cryptocurrency.