After calling Bitcoin several names, JP Morgan Chase has finally agreed that investors can now put 1% of their portfolio in the leading crypto asset. According to the firm, “cryptocurrencies rank as the poorest hedge for major drawdowns in equities, with questionable diversification benefits,” however, investing a part of their asset in the coin will help them “achieve any efficiency gain in the overall risk-adjusted returns of the portfolio.”
In a recent note to clients authored by top executives of the bank; Joyce Chang, the global head of research and the vice president of strategic research, Amy Ho, wrote that “cryptocurrencies are investment vehicles and not funding currencies. So when looking to hedge a macro event with a currency, we recommend a hedge through funding currencies like the yen or U.S. dollar instead.”
While most institutions believe Bitcoin could be used to hedge against inflation, JP Morgan holds a different view as the bank recently said the leading crypto asset was just an “economic sideshow.” The investment bank has also added that the recent price of the asset is above “fair value estimates.”
Notably, JP Morgan recently predicted that the value of Bitcoin could reach as high as $146,000.