JP Morgan Offers Three Reasons Investors Should Consider Bitcoin Despite Its Unconventional and Highly Volatile Nature

Banking giant JP Morgan is sharing three upsides to betting on the king of crypto.

In an assessment issued by JP Morgan’s Cross-Asset Strategy team, the firm explains the benefits of investing in Bitcoin, despite its large and frequent price fluctuations.

Economist and crypto trader Alex Krüger shared the document on Twitter. In it, the banking firm highlights overall favorable market conditions, the diminishing returns of bonds and conventional hedges, and Bitcoin’s unconventional platform as factors that make the asset worth enduring high volatility.

“Why bother considering an unconventional and high-volatility hedge? Three reasons: Equity and Credit valuations look record-rich for a very young business cycle; conventional hedges like DM Bonds barely serve as insurance when US 10Y rates are near 1%; and some as-yet unseen shocks (materially higher inflation, economically-debilitating cyber attacks or climate catastrophe) could favor an asset that operates outside conventional channels.”

JP Morgan’s release comes just as Bitcoin is showcasing its trademark volatility. The asset is down nearly 11% on the day and 21% on the week, as of writing.

In its publication, JP Morgan also asserts that small allocations to crypto assets can improve portfolio efficiency due to higher returns and their tendency to move somewhat independently of the traditional market. However, the firm predicts that the directional correlation between crypto assets and the traditional equities market may increase as the sector sees mainstream adoption.

In November, JP Morgan revealed that deep pocket investors may be ditching gold ETFs for Bitcoin based on vast differences in the volume of demand for gold ETFs and Grayscale’s Bitcoin Trust.

The banking institution posits that if Bitcoin is able to capture a fraction of assets traditionally allocated to gold, BTC will be able to double or even triple in price.

 

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