JPMorgan Says Investors Can Place 1% of Their Portfolios In Bitcoin Despite Calling It Bad Hedging – Markets and Prices Bitcoin News

After stating that cryptocurrencies “rank as the poorest hedge for major drawdowns on stocks, with questionable diversification benefits,” JPMorgan says investors can place 1% of their portfolios in cryptocurrencies . This can help “realize an efficiency gain in the overall risk-adjusted returns of the portfolio,” the company strategists explained.

Investors Can Allocate 1% of Wallets to Bitcoin, Says JPMorgan

JPMorgan Chase now sees benefits in adding a small percentage of bitcoin to a multi-asset wallet. The company’s global head of research, Joyce Chang, and vice president of strategic research, Amy Ho, wrote in a note to clients on Wednesday:

In a multi-asset portfolio, investors can likely add up to 1% of their allocation to cryptocurrencies in order to gain efficiency in the risk-adjusted overall returns of the portfolio.

However, the strategists clarified: “Cryptocurrencies are investment vehicles and not financing currencies. So, when looking to hedge a macro event with a currency, we recommend hedging by financing currencies like the yen or the US dollar instead. “

While many analysts believe bitcoin is a way to protect against large swings in traditional asset classes including stocks, bonds and commodities, JPMorgan has doubts. It wasn’t until last week that the investment bank claimed bitcoin was an ‘economic side show’, adding:

Crypto assets continue to rank as the poorest hedge against major stock declines, with questionable diversification benefits at prices well above production costs, while correlations with cyclical assets increase as ownership increases. cryptographic is integrated.

JP Morgan also said recent bitcoin prices have been much higher than estimates of the cryptocurrency’s fair value. The company further claimed that widespread adoption is increasing bitcoin’s correlation with cyclical assets, which rise and fall with economic changes. This reduces the advantages of Bitcoin of diversifying portfolios. Nonetheless, its most recent report recommends that investors add a small percentage of bitcoin to their wallets.

The investment bank has come a long way since its CEO Jamie Dimon branded cryptocurrency a fraud in September 2017. Earlier this month, JPMorgan co-chair Daniel Pinto said he was certain that the demand for bitcoin “will be [there] at one point. The executive confirmed: “If over time an asset class grows and will be used by different asset managers and investors, we will need to be involved.” Additionally, company analysts have predicted the price of bitcoin could reach $ 146,000 as cryptocurrency’s competition with gold heats up.

What do you think of JPMorgan’s point of view on bitcoin? Let us know in the comments section below.

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