JPMorgan analysts are somewhat optimistic, explaining that Bitcoin’s ability to survive the massive flash of volatility in March and April is “mostly positive.”
June 14 2020 | AtoZ Markets – Two weeks ago, two executives of the multinational financial services company Goldman Sachs came out against Bitcoin.
As reported by AtoZ Markets previously, the two said in a call to its clients that they currently do not see BTC as an asset class. They cited the asset’s high volatility, lack of cash flow, and its inability to properly hedge against inflation risk.
Now, one of Wall Street’s largest banks, JPMorgan Chase, has outlined in a recent analysis that Bitcoin’s 2020 performance demonstrates the asset’s growth and maturation. The paper also notes the compelling correlation the primary cryptocurrency is exhibiting with global equities.
JPMorgan is switching its stance on Bitcoin
The JPMorgan Chase analysis cited by Bloomberg examined the performance of Bitcoin and other assets since the start of the year. More precisely, it reviewed their performance during the mid-March massive sell-offs. That was the time when the novel COVID-19 introduced itself to the Western world.
The report from the giant American multinational bank asserted that despite all assets plunging hard, Bitcoin emerged relatively unscathed. The strategists leading the analysis are Joshua Younger and Nikolaos Panigirtzoglou. They both concluded that Bitcoin surviving the March 2020 crisis has outlined its “longevity as an asset class.”
But there is also the flip side
However, the bank also noted that such price fluctuations among all cryptocurrencies have attributed “to their continued use more as a vehicle for speculation than a medium of exchange or store of value.”
The strategists also looked into the correlation between assets during this challenging time, including last Thursday’s price plunges of both equities and cryptocurrencies. As such, they explained that even during March’s crash, the “liquidity on major Bitcoin exchanges [was…] more resilient than traditional macro asset classes like FX, Treasuries, gold, and equities.”
On the other hand, the report states that the coin’s market structure turned out to be more resilient than those of currencies, equities, Treasuries, and gold. The strategists came to this conclusion by measuring liquidity levels or the bid-offer spread of the order book, which is directly related to volatility.
“Though Bitcoin saw among the most severe drops in liquidity around the peak of the crisis, that disruption unwound itself much faster than other asset classes.”
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