Despite the recent slump, the crypto market is in, J.P Morgan, one of the most prominent banks in the world, is bullish on cryptocurrencies. This comes as a shock because of the bank's CEO's past comments on Bitcoin.
Over the Years, Jamie Dimon, J.P Morgan's CEO, has not been bashed Bitcoin on several occasions, calling it from 'Fraud' to 'Worthless.' Dimon has not been shy about his opinions, but it seems that the bank has taken a 180-degree turn in their opinion and what followed is three groundbreaking news from the bank, bringing hope to Bitcoin Investors in this bear market.
In a note to their biggest clients sent last Wednesday, JP Morgan mentioned that it believes that Bitcoin is undervalued as of now and has a fair value of $38,000(INR2969453). This is a piece of interesting news since Bitcoin has already broken the $29,200 support level and is heading towards the $25,300 level.
It is important to note that fair value can change over time, and it depends greatly on the asset's intrinsic worth. Market Price, on the other hand, is based simply on the laws of demand and supply. Since fair value can change over time, it does not mean that this necessarily means Bitcoin will go down again if it hits $38,000.
In the note, J.P Morgan has said that cryptocurrencies have been affected the most this year compared to security assets, debts, and real estate. This heavy downfall suggests an upcoming upside in bitcoin and the whole cryptocurrency markets.
From Incas to Indians, gold has been the primary source of savings and wealth for centuries. Gold has always been the preferred alternative investment for investors during the time of crisis, and hence the J.Pmorgan analysis of Bitcoin says that it is behaving like gold.
The same note that determined Bitcoin's fair value also said during the 2008 financial crisis gold was the favorite form of alternative investment. During the COVID 19 pandemic, both gold and Bitcoin have been acting similarly on the 3m Bitcoin/Gold volume and 6m Bitcoin/Gold volume chart.
Bitcoin has always been considered digital gold by the generation endorsing it, but JPM's note has made it clear that Bitcoin will be a perfect hedge in unstable markets and economies. But the analysts at JP Morgan also made it clear that Bitcoin's volatility is a problem for Venture Capitals and may not hold many Bitcoins could if the volatility of Bitcoin is decreased.
Bitcoin replaces real estate as a preferred alternative asset by JP Morgan
Though the bank's strategist downgraded the alternative asset class from overweight to underweight due to the randomness and macroeconomic challenges. JP Morgan is now preferring crypto assets over real estate as an alternative asset class along with hedge funds.
The not citing 'potential lagged repricing' in private equity, debt, and real estate; gave the nod to the potential of the blockchain technology. JP Morgan has also joined in the Series C funding, which raised $60 million.
JP Morgan's Tyron Lobban, who is the head of Onyx digital assets, talked to Coindesk at Consensus 2022 in Austin, Texas. In the interview, he talked about JP Morgan's future plans on tokenized assets. JP Morgan believes that tokenized assets have a lot of potential value, and the bank intends to tap into it.
In the interview, Tyron mentioned that their goal is to bring trillions of dollars into DeFi and make use of this newfound technology and bring institutions into the equation. Supporting Bitcoin and other cryptocurrencies is one thing, but supporting blockchain and crypto adoption is what drives the macro and fair value of an asset.
This is an interesting development for JP Morgan, from calling it fraud to being one of the industry leaders in cryptocurrencies. JP Morgan is also investing capital in new crypto and blockchain-based currency; while this news comes as a relief for bulls in this bloody market, JP Morgan's crypto adoption is a long-term strategy and needs to be perceived as such.
Interestingly it's not just JP Morgan that is getting into crypto; banks like Morgan Stanley also are investing avidly into cryptocurrencies; financial services like American Express and MasterCard have also been developing their own technology to adopt cryptocurrencies. In fact, American Express just released its crypto rewards credit card. MasterCard is also developing an NFT payment solution.
DeFi and crypto adoption is on the rise, and this bear market can be the perfect opportunity for you to get in. Every VC, institution, and hedge funds is getting into crypto or finding a good entry into crypto. It may not be as volatile as before this bull run, but the future of cryptocurrency seems to be bright.