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JPMorgan reverses its position on Bitcoin naming it the best alternative asset, while seven months ago its CEO Jamie Dimon called Bitcoin “worthless.”
Key points
- On Wednesday, JPMorgan published a client report that heralded Bitcoin as its top recommendation as an alternative asset — beating out real estate, hedge funds, and gold.
- The report went on to state that the top cryptocurrency should be priced at $38,000 per coin, which means Bitcoin is currently undervalued by about 28%.
- Interestingly, this report comes after the crypto market meltdown, which saw the entire sector lose about $500 billion in value this year.
- JPMorgan CEO Jamie Dimon has been a vocal critic of Bitcoin, calling it a “fraud” in 2017 and “worthless” last October.
In a surprising disclosure last Wednesday, investment banking giant JPMorgan issued a report to its largest clients touting Bitcoin as its preferred alternative asset for investors instead of real estate, physical gold, fine art, or any other alt-asset type. Generally speaking, alternative assets are anything other than cash, bonds, or stocks. The designation of Bitcoin as the uber-alt asset is surprising for a few reasons.
Massive crypto meltdown rocked investors
Following the macroeconomic conditions of high inflation, rising interest rates, and commodity shortages which seemed to trigger the $50 billion collapse of Terra (LUNA) and its companion stablecoin TerraUSD (UST), the entire crypto market loss snowballed to more than $500 billion in a few short weeks. Last November, the cryptocurrency market valuation was more than $3 trillion and as of this writing it’s $1.26 trillion according to CoinMarketCap.
Yet despite that selloff, media reports of the JPMorgan client note are bullish on crypto and Bitcoin in particular, stating that BTC is currently undervalued by 28% and needs to be trading at $38,000 on cryptocurrency exchanges to be fairly priced.
“The past month’s crypto market correction looks more like capitulation relative to last January/February and going forward we see upside for Bitcoin and crypto markets more generally,” JPMorgan chief strategist Nikolaos Panigirtzoglou was quoted as saying in media articles.
JPMorgan CEO has been a Bitcoin critic for years
Jamie Dimon has never been a fan of crypto or Bitcoin — calling Bitcoin a “fraud” in the past and “worthless” as recently as this past October. However, he has said that clients are interested in holding crypto assets despite his personal opinions, so JPMorgan is committed to meeting client requests, which is one of the drivers for this new designation of Bitcoin as a preferred investment asset.
Another reason for the JPMorgan recalibration of Bitcoin cited in the report is “potential lagged repricing” in private bonds, stocks, and property holdings suggesting those assets may be headed down in coming months. At press time, the price of Bitcoin was up 3.5% to more than $30,300 according to CoinMarketcap.
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