JPMorgan: Bitcoin to Remain More Risky Than Gold

JPMorgan analysts have argued against Bitcoin as an alternative to gold. The first cryptocurrency will not shield an investment portfolio during market downturns. This is stated in the company’s new report, Bloomberg reports.

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According to JPMorgan strategists John Normand and Federico Manicardi, Bitcoin is “the least reliable hedge during periods of heavy market stress.”

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Widespread adoption of cryptocurrency is driving use of Bitcoin to amplify capital gains earned during stock-market rallies. Accordingly, the digital currency is expected to correlate with other assets.

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“Widespread ownership of cryptocurrencies increases correlations with cyclical assets, potentially turning it from a hedge into leverage. This reduces the benefits of diversification and leads to lower performance during crises,” the strategists added.

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JPMorgan believes that Wall Street whales are currently steering Bitcoin’s price. The first cryptocurrency has become a cyclical asset, the analysts noted.

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Earlier, JPMorgan said that for Bitcoin to sustain its rally it must hold above $40 000, otherwise the asset could fall to lower levels.

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As noted on January 21, Guggenheim Partners’ investment director Scott Minerd predicted a drop in the price of the first cryptocurrency to $20 000. He believes Bitcoin has already reached the peak of its market value this year.

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