Bitcoin has seen huge increase in institutional interest in recent months
Two weeks ago, two executives at the multinational financial services firm Goldman Sachs clashed against Bitcoin. According previously reported by AtoZ Markets, the two said in a call to their customers that they do not currently see BTC as an asset class. They cited the asset’s high volatility, lack of cash flow and its inability to adequately hedge inflation risk.
Now, one of the biggest banks on Wall Street, JPMorgan Chase, highlighted in a recent analysis that Bitcoin’s performance in 2020 demonstrates the growth and maturation of the asset. The article also notes the compelling correlation that the main cryptocurrency is exhibiting with global stocks.
JPMorgan is changing its position in Bitcoin
The JPMorgan Chase analysis cited by Bloomberg examined the performance of Bitcoin and other assets since the beginning of the year. More precisely, he reviewed his performance during the massive sales in mid-March. It was at this time that COVID-19 introduced itself to the western world.
The report by the giant American multinational bank said that although all assets had fallen sharply, Bitcoin emerged relatively unscathed. The strategists leading the analysis are Joshua Younger and Nikolaos Panigirtzoglou. Both concluded that the Bitcoin that survived the March 2020 crisis outlined its “longevity as an asset class”.
But there is also the other side
However, the bank also noted that these price fluctuations among all cryptocurrencies attributed “to their continued use more as a vehicle of speculation than as a means of exchange or reserve of value”.
Strategists also looked at the correlation between assets during this challenging period, including falling stock and cryptocurrency prices. As such, they explained that, even during the March crash, “liquidity on major Bitcoin exchanges [era …] more resilient than traditional macro asset classes like FX, Treasuries, gold and stocks ”.
On the other hand, the report states that the currency market structure turned out to be more resilient than that of currencies, stocks, treasury bills and gold. The strategists reached this conclusion by measuring the liquidity levels or the spread of the purchase order of the order book, which is directly related to volatility.
“Although Bitcoin saw among the most severe drops in liquidity at the peak of the crisis, this rupture unfolded much more quickly than other asset classes.”
Source: Atoz Markets