Analysts at US investment bank JPMorgan Chase made another skeptical statement regarding Bitcoin (BTC), arguing that the current price is well above the fair value.
On Friday, Reuters reported that in a regular note to investors, JPMorgan argued that cryptocurrencies like Bitcoin are “economic margin” and the worst defense against falling stock prices.
Analysts say that Bitcoin’s widespread adoption increases its attachment to cyclical assets, making it a less attractive asset for portfolio diversification:
“Crypto assets remain the worst defense against massive inventory shortages, with questionable diversification benefits at prices well above production costs, while the association with cyclical assets increases with the spread of the cryptocurrency.”
In January 2021, JP Morgan strategists John Normand and Federico Manicardi announced that Bitcoin was becoming a cyclical asset, not a hedge of market pressures.
A cyclical asset is an inventory that follows a trend based on a specific business cycle. For example, companies in discretionary industries such as restaurants, hospitality, airlines, furniture, automobiles, etc. As Cointelegraph previously mentioned, the question of whether Bitcoin is a cyclic or non-cyclical asset remains controversial as many players in the industry firmly believe that the cryptocurrency is the primary defense against a market crunch.
The latest comments from JPMorgan came shortly after the company’s co-president Daniel Pinto said the bank was finally entering Bitcoin due to the growing needs of clients. In October 2020, when Bitcoin was trading at around $ 13,000, JPMorgan predicted that the bitcoin price would double or triple in the long term.
At the time of writing, Bitcoin was trading at $ 52,764, up over 70% in the past 30 days. After breaking the $ 50,000 price level on February 16, bitcoin cards reached a new permanent high of more than $ 53,000 earlier today, according to cryptocurrency monitoring website CoinGecko.