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JPMorgan’s controversial change of views on Bitcoin

One of Wall Street biggest and most influential banks, JPMorgan has altered its stance on cryptocurrency Bitcoin in a recent company report.

Support for Bitcoin

From openly criticising the leading cryptocurrency asset in multiple public statements only a couple of years ago, J.P. Morgan it seems have now turned full-circle and are somewhat impressed by the resiliency of Bitcoin during the pandemic.

Analysts of the report concluded: “Though the [bitcoin] bubble collapsed as dramatically as it inflated, bitcoin has rarely traded below the cost of production, including the very disorderly conditions that prevailed in March.”

As seen in this graph beginning January 2017, Bitcoin has rarely dropped below the production level, otherwise known as mining. Crypto research company TradeBlock calculated that the mining cost per Bitcoin in the lead up to the May halving was $7,000. Many cryptocurrency analysts have suggested that this could indicate a reasonable price floor for the assets true cost calculation.

Having not existed during the economic crash of 2008, the economic fragility as a result of the Coronavirus has been Bitcoin’s first test as a financial asset. According to top analysts at JPMorgan, unlike other assets during this time such as oil and some equities, Bitcoin has passed the test. The asset did fall to a 1-year low of $4,000 in mid-March, but has since recovered testing the $10,000 psychological region multiple times in the past few weeks.

Moving Forward

 JPMorgan’s recent acknowledgement of Bitcoin as a speculative asset and their praise at its resilience during the harsh financial 2020 will be positive for the asset’s popularity and future prospects.

Their recent services to crypto-exchanges Gemini and Coinbase too gives signs that the big players in Wall Street may finally be seeing the benefits of cryptocurrency in the financial markets.

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