JPMorgan’s mixed signals on bitcoin persist. The top US bank based on assets has released what’s been dubbed a “Bitcoin Bible” for investors, conceding that cryptocurrencies aren’t going away while simultaneously warning investors about a looming 50% or so drop in the BTC price. Meanwhile, JPMorgan’s CEO Jamie Dimon, whose distaste-turned-disinterest in bitcoin made headlines for months, hopefully ok’d the resources to create the bitcoin manual. Otherwise, someone’s job could be on the line.
The bitcoin bible, which is comprised of 71-pages of crypto, covers topics ranging from the technology of bitcoin to its use cases, not to mention the hurdles that it faces. Meanwhile, JPMorgan analysts have issued their own report saying conditions are ripe for the BTC price to fall to $4,605, which would reflect nearly a 50% drop from its current level of $8,727.
Perhaps the most revelatory finding in the bitcoin bible is the bank’s realization that cryptocurrencies aren’t going anywhere. They write:
“CCs are unlikely to disappear completely and could easily survive in varying forms and shapes among players who desire greater decentralization, peer-to-peer networks, and anonymity, even as the latter is under threat.”
The bitcoin bible also pointed to cryptocurrencies as a point of diversification for investment portfolios, providing a non-correlated asset to stocks and bonds, for instance. This point of view could bolster cryptocurrencies into the retirement market, such as 401(k) plans in the United States, or at least further the conversation.
The hurdles, they say, surround bitcoin and other cryptocurrencies competing with fiat based currencies, pointing to the euro and the yuan as some of its stiffest competition. And if you argue bitcoin more as a store of value than as a currency by which to spend, the argument loses some of its luster.
Less surprising is their acceptance of the blockchain, which Dimon himself has touted as “real” and whose technology is increasingly permeating the bank’s internal divisions. JPMorgan in the bitcoin bible points to the merits of distributed ledger technology for accelerating cross-border payments, pointing to “reward tokens or funding systems for other blockchain innovations and the internet of things.”
Meanwhile, despite the rosy report on bitcoin, JPMorgan analysts also issued a wake-up call in the form of technical analysis, warning investors that the BTC price is headed for a drop of enormous proportions, to the $4,605 level from its current price of more than $8,700, reflecting a drop of almost 50%.
“The question is whether we go there straight away, indicated on a failure to clear 10128 and 10776, or at a later stage after a stronger countertrend rally,” according to the analyst report cited in Business Insider.
But JPMorgan analysts, which remain “impressed” by the bitcoin price’s recovery from its recent doldrums, suggest that bitcoin’s fate is only sealed if it doesn’t break through its current resistance noted in the above range. If it can do that, the bitcoin price could recover back to a range of $14,334 to $16,304.
It’s not the first time that JPMorgan has sent mixed signals both to Wall Street and the crypto community on bitcoin. Jamie Dimon, JPMorgan chief executive famously called bitcoin a fraud back in September before having a change of heart. He later expressed remorse, with his feelings on the topic advancing from intolerance to no interest.
JPMorgan also addressed institutional capital, most of which remains sidelined from cryptocurrencies, as a signal to watch for cryptocurrencies making their way into the mainstream. Hedge funds comprise the lion’s share of the 175 cryptocurrency funds in the market, but assets under management have yet to surpass the low-billion-dollar threshold.
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Last modified: March 4, 2021 5:04 PM