Maintaining its estimate of bitcoin's fair value at $38,000, the bank today reiterated the assessment it gave the asset in February when the cryptocurrency was trading around $43,400. This price ($38,000) is approximately 28% higher than the current $29,757.
In a note to clients issued Wednesday, the bank has also stated that it is replacing real estate with digital, or crypto, assets as its preferred alternative asset class along with hedge funds, citing “potential lagged repricing” in private equity, private debt and real estate. Alternative assets typically refer to investments that aren't stocks, bonds or cash.
The appraisal is a nod of confidence to bitcoin, which is currently trading at less than half its all-time high of $68,721, and the broader category in general. In addition to rising interest rates and the fallout from the war in Ukraine, the cryptocurrency market is grappling with the $60 billion collapse of algorithmic stablecoin TerraUSD and its sister token LUNA. The total market capitalization of cryptocurrencies currently sits at $1.3 trillion—a dramatic decline from $3 trillion in November.
“The past month's crypto market correction looks more like capitulation relative to last January/February and going forward we see upside for bitcoin and crypto markets more generally," the bank’s strategists, led by Nikolaos Panigirtzoglou, noted in the report.
The strategists also believe that “the trajectory for VC funding would be crucial in helping the crypto market to avoid the long winter of 2018/2019”, which followed the initial coin offerings boom. Just today, Ethereum scaling startup Starkware raised $100 million at an $8 billion valuation and venture capital powerhouse Andreessen Horowitz announced that it had raised $4.5 billion for its fourth crypto fund.
“Thus far there is little evidence of VC funding drying up post-Terra’s collapse. Of the $25 billion VC funding year-to-date, almost $4 billion came after Terra,” the strategists noted. “Our best guess is the VC funding will continue and a long winter similar to 2018/2019 would be averted.”
Jamie Dimon, CEO of U.S. banking giant JPMorgan (JPM), said he will "defend your right to buy bitcoin," even if he personally will never buy any himself.
Cryptocurrencies. The emerging form of digital currency, cryptocurrency is seen as an alternative investment as it is outside the traditional scope of stocks and bonds.
JPMorgan was named explicitly by BlackRock as one of its authorized participants for the iShares Bitcoin Trust. The BlackRock ETF is leading the pack of new Bitcoin ETFs, reaching $1.8 billion in assets within two weeks of launching the fund.
Bitcoin's price is primarily driven by supply, demand, fear, and greed. Some people argue that its price is correlated to its cost of production, its utility as a store of value, or its intrinsic value—but if these were true, it would not be as volatile and reactive as it is.
The bank chief said in 2021 at peak crypto valuations that bitcoin was “worthless,” and he doubled down on that sentiment last year in Davos, Switzerland, when he told CNBC that the digital currency was a “hyped-up fraud.”
Visa Inc. In a research report sent out last week, JPMorgan said that the current fair value of bitcoin is $38,000. That's a long way short of the $44,000 it's at today, but let's not get too in the weeds about the figure itself.
Backing a currency is done by the currency's issuer to ensure its value. Bitcoin, gold, and fiat currencies are not backed by any other asset. Bitcoin has value despite no backing because it has properties of sound money.
Alternative assets are investments that aren't typically included in traditional investment portfolios. Alternative assets include real estate, cryptocurrencies, commodities, art, options, futures, forex, NFTs, peer-to-peer lending and venture capital. Alternative assets tend to be riskier than traditional assets.
Bitcoin is largely unregulated and bitcoin investments may be more susceptible to fraud and manipulation than more regulated investments. Bitcoin is subject to unique and substantial risks, including significant price volatility and lack of liquidity, and theft.
Chase Bank does not offer crypto brokerage services, which include buying and selling of assets such as Bitcoin. However. Its parent JPMorgan Chase does allow its wealthy retail clientele to invest in cryptocurrency-related funds.
Despite the JP Morgan CEO's long-standing criticism of Bitcoin, the lender has been serving as an Authorized Participant for BTC ETFs since their launch and has been involved in several blockchain-based projects for numerous years.
Michael Saylor's US-listed business intelligence firm is the biggest institutional holder of bitcoin with more than 214,000 coins, more than 1% of the total supply, according to Bitcoin Treasuries data. Bitcoin's current price of around $64,000 means MicroStrategy's crypto holdings are worth roughly $14bn.
Bitcoin's price is primarily affected by its supply, the market's demand, availability, competing cryptocurrencies, and investor sentiment. Bitcoin supply is limited—there is a finite number of bitcoins, and the final coins are projected to be mined in 2140.
Bitcoins are still only accepted by a very small group of online merchants. This makes it unfeasible to completely rely on Bitcoins as a currency. There is also a possibility that governments might force merchants to not use Bitcoins to ensure that users' transactions can be tracked.
Dimon continued his criticism of Bitcoin, saying “it does nothing.” “I call it the pet rock,” he said. Dimon then corrected himself to say he did think Bitcoin did actually have some uses. They just all happened to be illegal such as money laundering, fraud, tax avoidance, or as payment for sex trafficking, he said.
Perhaps the most famous value investor of all time, Warren Buffett is strongly against Bitcoin and other cryptocurrencies, saying, "You can't value Bitcoin because it's not a value-producing asset." Buffett and his holding company Berkshire Hathaway Inc. have been well-known for their investments in stable and ...
Goldman Sachs, nowadays one of the few Wall Street banks to do so, isn't backing away from its negative stance against crypto, as it doesn't see any value in the asset.
Introduction: My name is Neely Ledner, I am a bright, determined, beautiful, adventurous, adventurous, spotless, calm person who loves writing and wants to share my knowledge and understanding with you.
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