JPMorgan has advised its customers to allocate 1% of their money to Bitcoin, as the cryptocurrency could provide a potential hedge against fluctuations in traditional assets
Investment bank JPMorgan sent its clients a notice asking them to allocate 1% of their portfolio to hedge against fluctuations in traditional assets. According to the bank, the Bitcoin allocation would help them overcome fluctuations in assets like stocks, bonds, and commodities.
JPMorgan strategists Joyce Chang and Amy Ho said in a statement to their clients: “In a multi-asset portfolio, investors can likely add up to 1% of their allocation to cryptocurrencies for an efficiency gain in the portfolio’s total risk-adjusted returns.”
Confirmation came when the leading cryptocurrency lost more than 20% of its value since hitting an all-time high of over $ 58,000 on Feb.21. Bitcoin trades just above the $ 46,000 mark on most cryptocurrency exchanges, down 8% over the past 24 hours.
According to a Bloomberg report, the Bank of New York Mellon Corporation (BNY Melon) also announced its plans to hold, transfer and spend Bitcoin on behalf of its customers.
The bank has long been touted as one of the most well-known financial institutions for entering the cryptocurrency space. BNY Melon’s entry could make it easier for thousands of investors to access Bitcoin and a variety of other cryptocurrencies that they offer.
JPMorgan strategists advised their clients to treat Bitcoin and other cryptocurrencies as investment vehicles instead of funding currencies like the US dollar (USD) or the Japanese yen (JPY).
This latest advice from JPMorgan strategists contradicts comments from other investment bank analysts earlier this month. According to the analysts, cryptocurrencies remain one of the poorest hedges for major drawdowns in stocks.
JPMorgan was previously critical of Bitcoin. However, the bank has changed its stance on cryptocurrency in recent years. More and more financial institutions and companies are entering the cryptocurrency space.
Tesla, MicroStrategy, Square, Paul Tudor Jones, and Stan Druckermiller are some of the leading companies and investors investing billions of dollars in the cryptocurrency market. Ark Investment Management’s Cathie Wood believes the price of Bitcoin would rise by $ 200,000 if all companies put 10% of their cash into the cryptocurrency.