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: Bitcoin Matures
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 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, Joshua Younger and Nikolaos Panigirtzoglou, concluded that surviving the March 2020 crisis has outlined BTC’s “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 indicated that Bitcoin has been correlating more with riskier assets like equities lately, instead of gold.
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.”
JPMorgan Chase. Source: Financial Times
JPMorgan Changes Its Mind On BTC
The giant investment bank has come a long way in its views regarding the primary cryptocurrency. From its CEO Jamie Dimon calling it a “fraud,” then apologizing for it, and now acknowledging BTC’s growth, it appears that JPMorgan has completed a full one-eighty turn.
Another example that could support the bank’s somewhat optimistic approach towards cryptocurrencies came in May this year, following reports that JPMorgan has started accepting clients from the digital asset industry, via the two leading US exchange – Coinbase and Gemini.
JPMorgan revealed that proper regulation is vital, and both exchanges had taken the necessary steps to obtain the bank’s approval.