Bitcoin is not reliable in market uncertainties, says JP Morgan

Charlie Taylor

JP Morgan analysts argued against the Bitcoin (BTC) value proposition as a gold competitor, saying that the largest cryptocurrency by market capitalization is not an adequate hedge during periods of uncertainty.
According to Bloomberg, JP Morgan strategists John Normand and Federico Manicardi released a report classifying Bitcoin more as a risky asset than a hedge against market uncertainties. As part of his analysis, the official noted that BTC was the “least reliable hedge” in periods of strong market declines.
In mid-March 2020, during the Black Thursday market crash, speculation about the coronavirus pandemic saw a huge settlement haze dominate the financial market. Bitcoin and altcoins, in general, have not been excluded, with the market losing about 50% of its value.
However, Bitcoin quickly recovered from the decline that reached the $ 3,800 level and was already above $ 5,000 just days later. In fact, BTC ended 2020 almost six times above its 2020 fund.Cointimes Awards
As part of their report, JP Morgan analysts stated that Bitcoin has had a low correlation with hedges over the past five years. Well, gold, traditionally attributed to hedge asset status, has risen 70% in the past five years. Meanwhile, Bitcoin is up almost 7,000% over the same period.
Gold also fell sharply during the March 2020 market crash. The precious metal made a significant recovery, but ended up experiencing massive volatility at the end of the year.
In addition to arguing against Bitcoin being classified as a hedge asset, JP Morgan strategists opined that Wall Street was running BTC. Thus, cryptocurrency should now become a cyclical asset.
An excerpt from the report says:Cointimes Awards

The integration of cryptocurrency into the mainstream is increasing the correlations with cyclical assets, potentially transforming it from insurance to leverage.

In fact, 2020 was the year of the beginning of institutional entry, with many players of great fortunes adopting Bitcoin. Publicly traded companies like MicroStrategy have added BTC to their balance sheets, with insurers and hedge funds joining the trend.
Bitcoin is currently experiencing a price decline, dropping around 7.5% in the past 24 hours. The total market capitalization of cryptocurrencies has also dropped by more than $ 100 billion.
Read more: More than 31% of people in Latin America want to invest in Bitcoin


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