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 .