Strategists at JP Morgan, the Wall Street banking giant, have suggested that giving 1% of the bitcoin portfolio would hedge against fluctuations in traditional asset classes such as stocks, bonds and commodities.
It is recommended to set aside a small percentage to reduce the risk of a significant reduction in the value of digital assets. Bitcoin is down 20% from a record high of over $ 58,000 on February 21, but is up 60% since the beginning of this year.
According to Bloomberg, JPM strategist Joyce Chang and Amy Ho stated in a note to clients:
“In a multi-asset portfolio, investors are likely to invest up to 1% of their investments in cryptocurrencies to achieve efficiencies in the portfolio’s overall risk-adjusted return.”
The approval comes among massive investments in bitcoin by Paul Tudor Jones, Stan Druckenmiller, Tesla and MicroStrategy. The report added that BNY Mellon (Bank of New York Mellon Corporation) also announced plans to preserve, transfer and release digital assets to its customers.
Analysts at JPMorgan added that cryptocurrencies should be seen as investment funds instead of financing currencies such as the US dollar or the Japanese yen. The comments appear to be at odds with comments made earlier this month by other investment banking strategists who claimed that “cryptoassets are still considered the worst hedge for large stock withdrawals.”
In a speech to CNBC on February 17, Katie Wood of Ark Investment Management noted that if all companies invest 10% of their money in bitcoin, they will add $ 200,000 to the price of the asset.
Purchases of cryptocurrencies will grow in 2021, and it is not just institutions that are growing. The trading company Robinhood reports that in the first two months of this year alone, approximately 6 million new users have bought cryptocurrency on the platform.
The figures overshadow last year’s figures, which indicates that the strong momentum in the retail trade is still strong despite the latest correction. At the time of writing, BTC has fallen another 7% in the last 24 hours and is trading at $ 47,100.