Investment bank JP Morgan Chase is back on the anti Bitcoin bandwagon, despite a report from the bank in February 2018 that stated cryptocurrencies might one day play a role in the diversification of global equity and bond portfolios – and is now saying that Bitcoin is only useful in a capitalist dystopia.
JP Morgan Have A History Of Controversial Opinions About Bitcoin
Analysts at the American multinational investment bank said in a note dated 24 January that cryptocurrencies would only have value in a dystopian economy where investors have lost confidence in “all major reserve assets (dollar, euro, yen or gold) and in the payments system” according to a report from Business insider.
“We have long been skeptical of cryptocurrencies’ value in most environments other than dystopia” the analysts wrote. “Their boom-bust cycle is similar to the path of gold in the early 1970s, the Nikkei in the 1980s and technology stocks in the 1990s”.
“Even in extreme scenarios such as a recession or financial crises, there are more liquid and less-complicated instruments for transacting, investing and hedging,”
Despite low correlation to traditional assets, a statistic that measures the degree to which two securities move in relation to each other, they are not the best bet for diversification. “Low correlations have little value if the hedge asset itself is in a bear market”, the analysts said.
“If the future indeed entails dystopia, then for consistency, investors and corporates should be making broader and deeper preparations beyond just acquiring cryptocurrencies,” said John Normand, head of cross-asset strategy with JP Morgan.
The bank also said this week that Bitcoin is worth less than the costs to mine it.
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