JPMorgan strategists believe that investors can invest up to 1% of their capital in Bitcoin (BTC). In this way, they will reduce the risks of losses from fluctuations in the market for traditional assets such as stocks and commodities.
Such a low share of cryptocurrency is explained by the presence of risks of periodic exacerbation of BTC volatility, according to a note prepared by strategists Amy Ho and Joyce Chang.
They recalled that this week the value of bitcoin fell by 10%, but since the beginning of 2021 it has added 60%.
The analyst review notes :
“In a portfolio with several assets, investors can allocate up to 1% of their funds and channel them into cryptocurrency. This will improve efficiency for overall risk-adjusted return [in traditional markets]. ”
JPMorgan’s memo was released amid growing interest in bitcoin from institutional investors. It is already known that financiers such as Paul Tudor Jones and Stan Druckenmiller have already bought BTC.
MicroStrategy and Tesla have also invested in cryptocurrency.
JPMorgan strategists admit that bitcoin can be used as a hedging instrument against, for example, the US dollar and the Japanese yen. It can perform a similar function in relation to securities.
A shortage of the real supply of bitcoins is forming on the cryptocurrency market
The founder of the research company Glassnode, Rafael Schulze-Kraft, shared an important conclusion: the real supply of bitcoins is falling sharply. According to him, since 2017, the number of digital assets unavailable for purchase and sale has been growing faster than the volume of available liquid assets of this type, including because until May 2020, miners mined 1,800 bitcoins daily, and then only 900 bitcoins per day. …
The amount of illiquid #Bitcoin supply in the network has grown more than the circulating supply since 2017.
Meanwhile, liquid supply continues to see a steep decrease.
Pair this with the demand from MSTR, Square, Tesla, Grayscale et al., and understand how bullish this is.
– Rafael Schultze-Kraft (@ n3ocortex) February 25, 2021
Talking about the current situation, the analyst calculated that there are about 3 million bitcoins, which he attributed to the group of «highly liquid». There is also a contingent reserve of such assets on the market in the amount of another million bitcoins, but 14.5 million bitcoins are assets that are not available for purchase and sale.
The current liquid/illiquid #Bitcoin supply numbers:
– highly liquid: 3M
– liquid: 1M
– illiquid: 14.5MChart (Pro needed)
– Rafael Schultze-Kraft (@ n3ocortex) February 25, 2021
Schulze-Kraft writes that «along with the demand for bitcoins such companies as MicroStrategy, Square, Tesla, Grayscale, such a situation with the supply of this digital asset works in favor of the growth of its price.» Indeed, investors such as MicroStrategy, Square and Grayscale have not just invested in bitcoins, but are demonstrating a desire to continue investing in digital assets.
In total, all institutional investors now account for $ 67 billion invested in bitcoins. Michael Sailor, head of MicroStrategy, commenting on the return of bitcoin to the level of $ 50 thousand, which was observed on February 25, said that the total capitalization of the cryptocurrency market could reach $ 100 trillion in the future against the current $ 1.5 trillion.
Jiles Koglan, senior market analyst at HYCM, believes there is a good chance that the price of bitcoin will not go below $ 40,000 in the course of a possible correction. At the same time, he believes that some altcoins have a chance to overtake the dynamics of bitcoin in terms of growth rates, at least over a short distance. Indeed, other digital assets are now also feeling the influx of investor funds, and the level of Bitcoin dominance in the market (61.3%) is now noticeably lower than in December 2017.
