JP Morgan strategists recently established that Bitcoin has become a cyclical asset, not a hedge. A Wirex survey reveals that older people see the potential of cryptocurrencies in payment systems.
“The pioneering cryptocurrency has become a cyclical asset rather than a hedge against market stresses. This has occurred in the wake of the bullish market for Bitcoin (BTC),” strategists at JP Morgan Chase said.
John Normand and Federico Manicardi, strategists at JP Morgan, consider that betting on Bitcoin as a portfolio diversifier means taking risks. In a recent report, they called Bitcoin the “least reliable hedge during periods of acute market stress.”
The strategists added that “the integration of the crypto property allows the correlations with cyclical assets to increase, making them potentially safe on leverage.”
The term “cyclical assets” generally refers to those stocks that follow the trend of the general economy. Therefore, its performance depends on the economic cycle.
Some companies provide high-demand goods and services when the economy is doing well. For that reason, these assets are among the first items that people leave behind when the economy weakens.
Survey Reveals that Older Investors Are Entering into BTC and Other Cryptocurrencies
Seniors have started to see the potential of cryptocurrencies and blockchain in global payment systems. A recent report on the adoption of cryptocurrencies in 2021 from the digital payment platform Wirex reveals this situation.
This platform includes in the report the results of surveys that they applied to 3,834 people in 89 countries. The purpose of that piece of information is to help understand the new trends in the global adoption of blockchain-based digital payments.
Wirex conducted that survey on the use of cross-border transactions over three weeks. To do this, they sent e-mails requesting the voluntary participation of those who wanted to serve as informants. Responses included 81% by European residents and 17% by participants from the Asia Pacific region.
Guggenheim CIO Expects Bitcoin’s Price to fall by USD 20,000
Scott Minerd, a senior executive at financial services company Guggenheim Partners, plans to seek investment exposure to Bitcoin (BTC). He has argued that BTC is about to drop to USD 20,000.
The Guggenheim chief investment officer believes that Bitcoin will not be able to hit another all-time high in 2021. “After reaching USD 42,000 on January 8th, Bitcoin’s price is unlikely to rise before 2022,” Minerd said.
“I think that we have already reached the Bitcoin price ceiling this year. Besides, we could see a complete pullback towards the USD 20,000 level,” added the Guggenheim CIO.
Despite its short-term bearish prediction, the CIO seems to believe that Bitcoin will reach USD 400,000 per unit. He made that point in December 2020, when Bitcoin was heading for a new all-time high.
However, he subsequently turned bearish in the short term, saying that “Bitcoin’s parabolic surge is unsustainable in the short term.” From Minerd’s statements, he seems to be aware of the great potential that Bitcoin has.
By Alexander Salazar
