June 16, 2021

Bitcoin »JPMorgan Approves 1% Allocation as Hedge

Bitcoin would serve as a hedge against fluctuations in traditional assets

Strategists at Wall Street banking giant JPMorgan suggested that a 1% allocation of the portfolio to Bitcoin would serve as a hedge against fluctuations in traditional asset classes such as stocks, bonds and commodities.

A small percentage allocation has been advised to mitigate the risk of any significant drop in the value of the digital asset. The price of Bitcoin has fallen 20% from its all-time high of over $ 58,000 USD on February 21, but is up 60% since the start of this year.

According to Bloomberg, JPM strategists Joyce Chang and Amy Ho said in a note to clients:

“In a multi-asset portfolio, investors can probably add up to 1% of their allocation to cryptocurrencies in order to gain efficiency in the risk-adjusted total returns of the portfolio”

The approval comes following major investments in Bitcoin by Paul Tudor Jones, Stan Druckenmiller, Tesla and MicroStrategy. The report adds that BNY Mellon (Bank of New York Mellon Corporation) has also announced its intention to own, transfer and issue the digital asset for its customers.

JPMorgan analysts added that crypto assets should be treated as investment vehicles and not as currencies like the US dollar (USD) or Japanese yen (JPY). The comments appear to contradict those made earlier this month by other investment banking strategists who claimed that “crypto assets continue to rank as the poorest cover for major drawdowns on stocks.”

Speaking to CNBC on February 17, Cathie Wood of Ark Investment Management observed that if all companies invested 10% of their money in Bitcoin, it would add $ 200,000 USD to the price of the asset.

Purchases of cryptocurrency have increased in 2021, and it’s not just the institutions that are doing it. Robinhood trading firm reported that around 6 million new users bought cryptocurrencies on the platform in just the first two months of this year.

The numbers eclipsed those of the previous year, indicating that the bullish momentum in the retail sector is still strong despite the recent correction. At the time of writing, BTC has fallen a further 7% in the past 24 hours to trade at $ 47,100 USD.

Par Martin Young, Cointelegraph » article in english

Martin has been writing about cybersecurity and infotech for two decades. He has previous trading experience, has covered forex and finance, and has been working in the blockchain and crypto industry since 2017.

The opinions expressed here are solely those of the author and do not necessarily reflect the views of Forex Quebec. Every investment and trading move comes with risk, you should do your own research when making a decision.

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Disclaimer: The information and opinions contained in this report are provided for general information only and do not constitute an offer or a solicitation to buy or sell currency contracts or CFDs. Although the information contained in this document has been taken from sources believed to be reliable, the author does not guarantee its accuracy or completeness, and assumes no responsibility for any direct, indirect or consequential damages that may result from the fact that someone relies on such information.