JPMorgan Considers Bitcoin as Cyclical Asset, Not Hedge
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21 January
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Bitcoin's (EXANTE: Bitcoin) recent sell-offs confirm that the largest cryptocurrency by market capitalization is not a hedge tool for portfolio diversification, but rather a cyclical asset, Bloomberg reports, citing JPMorgan's strategists.

The bank's analysts John Normand and Federico Manicardi say bitcoin is the "least reliable hedge" during a market turbulence. The analysts also note bitcoin's upcoming activity will not play in favor of the cryptocurrency's status as a defensive asset.

"The mainstreaming of crypto ownership is raising correlations with cyclical assets, potentially converting them from insurance to leverage," they added.

The US financial giant stressed that the recent bitcoin performance is hurting the asset as it moves in lockstep with traditional cyclical markets and becomes less uncorrelated.

"If sustained, this development could erode diversification value over time," the strategists warn.

Previously, the bank's experts said that BTC's failure to break through the $40,000 key mark could trigger exodus of trend-following investors.

BlackRock Aims at Bitcoin Futures

The analysts note the inflow of cash into the Grayscale Bitcoin Trust should help to determine the outlook of the cryptocurrency.

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