JPMorgan suggests clients endorse 1% allocation to BTC as a hedge against inflation and fluctuations in traditional asset classes like bonds, commodities and stocks so let’s read more in our latest Bitcoin news.
A small percentage allocation was advised to mitigate the risks of bigger downturns in the digital assets’ value as BTC dropped 20% since its all-time high of over $58,000 but it is up by 60% since the start of the year. According to Bloomberg, JPM strategists Joyce Chang and Amy Ho stated:
“In a multi-asset portfolio, investors can likely add up to 1% of their allocation to cryptocurrencies in order to achieve any efficiency gain in the overall risk-adjusted returns of the portfolio.”
The endorsement came on the back of major investments by Paul Tudor Jones, Stan Druckenmiller, Tesla, and Microstrategy, adding that BNY Mellon announced plans to hold, issue, transfer digital assets for the clients. The JPMorgan analysts added that the crypto assets will be treated as an investment vehicle and not funding currencies like JPY or USD with the comments slightly contradicting the ones made earlier this month by another strategist who claimed that these crypto assets will continue ranking as the poorest hedge for major drawdown inequities.
Ark Investment Management’s Cathie Wood spoke to CNBC and said that if all corporations will put 10% of their cash into BTC, it will add $200,000 to the price of the asset. JPMorgan suggests clients should allocate 1% of their investment to BTC especially now since crypto purchases surged in 2021 and not only institutions tried to get their hands on it. Trading company Robinhood reported that about 6 million new users purchased crypto on the platform in the first two months of 2021. The numbers dwarfed those for the previous year indicating that the bullish momentum from the sector is strong despite the recent correction. At the time of writing, BTC retreated another 7% over the past 24 hours and traded at $47,000.
As previously reported, The giant US multinational investment bank could be among the next few entities to get involved with BTC. JPMorgan’s co-president Daniel Pinto said that while the demand for the number one cryptocurrency is not there yet, it will be at some point and the bank has to be prepared.
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