According to the latest remarks from the JP Morgan Chase Cryptocurrency Market Potential Report, cryptocurrencies might play a role in the diversification of the global bold and equity portfolios.
13 February, AtoZForex – It might be that the JP Morgan Chase’s analysts are finally changing their mind over the cryptocurrency market. The group of analysts has written a 71-page report on the tech industry.
JP Morgan Chase Cryptocurrency Market Potential Report
The report “Decrypting Cryptocurrencies: Technology, Applications and Challenges" was sketched by the Global Research Unit at JP Morgan Chase. The report discusses a number of subjects in regards to the cryptocurrency market and Blockchain. It also talks about implications for investors and central banks.
One of the key points mentioned in the report is looking into how cryptocurrencies might play a role in the diversification of the global bold and equity portfolios. The statement from the report reads:
"If past returns, volatilities and correlations persist, could potentially have a role in diversifying one's global bond and equity portfolio. But in our view, that is a big if given the astronomic returns and volatilities of the past few years."
The analysts further add:
"If survive the next few years and remain part of the global market, then they will likely have exited their current speculative phase and would then have more normal returns, volatilities (both much lower) and correlations (more like that of other zero-return assets such as gold and JPY).”
The use of Blockchain
The report also makes it clear that analysts believe that cryptocurrencies will not “disappear completely.” They write:
" are unlikely to disappear completely and could easily survive in varying forms and shapes among players who desire greater decentralization, peer-to-peer networks and anonymity, even as the latter is under threat.”
Following on this, the report also pays attention to the use of Blockchain. Specifically, the document notes the question of Blockchain use by private firms. The analysts also state that Blockchain is a “superior database”. They add that in spite of the concerns from the regulators, this industry is “regulatory friendly.”
Moreover, the authors have argued that Blockchain has the potential to disrupt "cross-border payments, settlement/clearing/collateral management as well as the broader world of TMT, transportation and healthcare."
The report also warns that any benefits would be realized "only where any cost efficiencies offset regulatory, technical and security hurdles" to executing the technology.
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