Amid the crypto surge, JP Morgan has also elaborated upon three major reasons why an investor should bring Bitcoin into his business portfolios. Says high returns is the ultimate reward of investment in Bitcoin and other prominent digital assets such as Ethereum and Litecoin. Suggests putting in lower allocations of reserves as investment in crypto.
Last week, the world’s leading financial institution, JPMorgan, has released its report compiled by its Cross-Asset Strategy Head, John Normand. The report has been issued on the subject of digital assets’ impacts upon investment portfolios.
JPMorgan’s analyst, Normand suggested in the report as to why it is important for an investor to bring Bitcoin into his investment portfolio. Thereafter the analyst has given almost three major reasons to support his report. He first of all endorsed that Bitcoin has outperformed every asset on earth in a very short period of time. He compared Bitcoin’s current investment drive with the gold trading boom in the US and Japanese markets in the ’70s and ’80s.
While dealing with the issue of Bitcoin’s volatility, the analyst agreed that this is an issue but said that it has become secondary. He argued that in March 2020, Bitcoin’s value was under US$ 7,000 but as of today, Bitcoin’s value has increased to US$ 32,000. He stated that this wouldn’t make any difference to the investor who had bought the coin in March and wishes to sell it today. Simply the seller would be earning approximately US$ 25,000 excluding investment, said Normand.
Normand further highlighted that credit valuations as well as equity for the entire crypto industry looks to be on the higher side. Secondly, a trader would always prefer high equity which is the general norm for the trading industry.
Thirdly, he stated that the world is going to witness high inflation and financial climate changes. He argued that this would only favor unconventional assets such as Bitcoin and other digital assets like Ethereum, Bitcoin Cash and Litecoin etc. He also referred to the upcoming stimulus package promised by the US’s new President, Joe Biden. He further argued that the package is expected to send the prices of cryptocurrencies further up, in particular of Bitcoin.
However, Normand suggested that instead of going full guns blazing, an investor should tread carefully. Small allocations of investment, for instance from 2% upto 5%, would still help diversify the portfolio of any individual/institution. He based his argument on the fact that small investments in Bitcoin has the potential of returning high profits.
He ended his Bitcoin analysis by agreeing to the possibility of Bitcoin being traded on over US$ 146,000 in the near future. He suggested that the competition between Gold and Bitcoin will only heat up and this is a good sign for both asset classes.