JPMorgan members recommend making a 1% investment in Bitcoin to avoid risks. At JPMorgan, they view cryptocurrencies as investment vehicles.
The price of Bitcoin (BTC) has fallen recently, but institutions are maintaining their positive stance towards the pioneering cryptocurrency. JPMorgan strategists have recommended exposing at least 1% of an investment portfolio to Bitcoin for a low-risk profit.
This small capital exposure seeks to mitigate the risks associated with the volatility of the cryptocurrency market. However, such volatility could contribute to profit in this market, according to representatives of JPMorgan.
Strategists Joyce Chang and Amy Ho assured that “investors can add up to 1% of their allocation to cryptocurrencies in a portfolio of multiple assets.” In this way, the latter would make “any efficiency gains in the overall risk-adjusted returns of the portfolio.”
Additionally, Chang and Ho consider cryptocurrencies as “investment vehicles.” For that reason, they said that no one should treat them as “financing currencies”, in contrast to fiat money.
“When looking to hedge a macro event with a currency, we recommend currencies such as the yen or the US dollar,” the strategists added.
Obviously, the recommendation contrasts with those of other institutions, particularly with the strategy that MicroStrategy has taken. The company that Michael Saylor heads has adopted an aggressive way of hoarding Bitcoin. They have made investments of up to USD 1 billion in the most recent round of buying Bitcoin.
Bitcoin as Competition for Gold, according to JPMorgan
JPMorgan strategists have recently made recommendations that align with this institution’s latest approach to Bitcoin.
On other occasions, the organization has shown a very positive attitude towards Bitcoin. In addition to a potential price above USD 146,000, they see Bitcoin as a growing competition for gold as a store of value.
However, this favorable stance towards Bitcoin is relatively recent since JPMorgan used to be highly critical of the cryptocurrency. As has been happening at the institutional level, the firm has changed this narrative.
JPMorgan has come to support exchanges like Gemini and Coinbase for their Bitcoin operations. They have even launched their blockchain with a cryptocurrency that they have already used to finance themselves: JPM Coin.
The JPMorgan’s Zoom Meeting
Large companies have been changing their attitude, seeing valuable financial assets in Bitcoin and cryptocurrencies. Traditional companies such as MicroStrategy and Tesla, as well as large investment firms, are starting to bet millions of US dollars in Bitcoin. In this way, they give the crypto asset greater support and pressure companies to enter the cryptocurrency market.
In a zoom meeting between JPMorgan traders and its Co-President Daniel Pinto, the latter commented that they were open to using cryptocurrencies. However, that will depend on the demand for financial products related to cryptocurrencies from their customers.
Its strategists are recommending their customers to invest in Bitcoin is a sign that the bank is taking its inclusion seriously. Institutional investors have made huge profits from their purchase of the crypto asset. Therefore, investing at least 1% of personal allocation in Bitcoin is an idea that needs consideration.
By Willmen Blanco