The strategists at JPMorgan Chase, one of the largest investment banks in the United States, believe that Tesla’s purchase of $ 1.5 billion Bitcoin (BTC) won’t necessarily trigger a lot of similar investments.
A group of JPMorgan strategists, led by Nikolaos Panigirtzoglou, reportedly argued that Bitcoin’s high volatility could keep its established corporate treasurers away from Bitcoin. “The main problem with the idea that mainstream corporate treasurers will follow Tesla’s lead is the volatility of Bitcoin,” the strategists wrote in a statement to investors, Bloomberg reported on Tuesday.
According to JPMorgan, even a small portion of Bitcoin in corporate treasures’ portfolios would be high risk, as these companies typically keep their portfolio volatility at around 1%. Even if Bitcoin accounts for 1% of total allocations, it would “greatly increase the volatility of the overall portfolio” and potentially increase the volatility of the portfolio from 80% to 8% due to Bitcoin’s annualized volatility, the strategists said.
Elon Musk’s Tesla Motors hit the headlines on February 8 when it announced a $ 1.5 billion Bitcoin purchase in a filing with the US Securities and Exchange Commission. The news sparked a parabolic surge in an already recovering crypto market, and Bitcoin subsequently hit a new all-time high of over $ 48,000.
After the big move, some key crypto personalities, including Galaxy Digital founder Michael Novogratz, expressed confidence that “every company in America” will follow Tesla’s decision to allocate part of their balance sheets to Bitcoin. Michael Sonnenshein, CEO of Grayscale Investments, also predicted that the world will soon see “many other visionary leaders and disruptive companies who actually realize that it really has gone from why to why”.
Some crypto players also speculated that US tech giant Apple could be the next institutional player to take over the crypto asset.