Bitcoin now seems to be valuable enough, even to JP Morgan analysts. The strategists there are now recommending investors to include at least 1% Bitcoin in their portfolio. This is a great development for the future of cryptocurrency. JP Morgan was one of the firms that were not very enthusiastic about Bitcoin. And their acceptance of the currency now means that investing in the same is not such a bad idea after all. PS: I never thought it was a bad idea.
JP Morgan recommends 1% Bitcoin in portfolio
The JP Morgan strategists that recommend adding Bitcoin to one’s portfolio were Joyce Chang and Amy Ho. They said that Bitcoin could act as a hedge to fluctuation to traditional assets like equity, commodities, and bonds. But these individuals made it very clear about keeping this inclusion very small. This does make sense for the strategists to play on the safe side, so their clients don’t lose money. But, if you see that the price of Bitcoin has been up 500% in a year, the idea to invest only 1% of your portfolio doesn’t seem that great.
Bitcoin does have huge volatility, making it difficult for firms and investors to pour large amounts into it. Just recently, after the tweet of Elon Musk, the price of one Bitcoin fell from $58,000 to almost $45,000, which is almost 20% of its value. The point is that the price fluctuations cannot be predicted or prevented, and Bitcoin could give a lot of profit but losses too. The thing is, you should have the capacity to hold. Just think about the investors who bought Bitcoin at $58,000 and are now sitting more than 20% down. If they don’t want losses, all they can do is hold and wait for the prices to recover. This is why allocating only 1% of one’s portfolio to it does make sense.
Bitcoin’s acceptance in the financial world
In 2021, many banks have joined big firms, companies, and institutions to invest and use Bitcoin. Blue Ridge bank became the first bank in the US to allow BTC purchases from their ATMs. At the same time, BNY Mello, the oldest bank of America, now allows users to transact using Bitcoin through their network. The acceptance of cryptocurrency by the banks of the country is one of the most important factors that is going to drive the usage of Bitcoin in the real world.
We still have a long way to go, and companies like Visa and Mastercard are yet to implement Btc in their payment portals. We should understand that till the price of Bitcoin reaches its peak value which could be $300,000, $500,000, or if I am ambitious, even $1 million, volatility will stay. And this will prevent more banks and even the general public from using it as a replacement for the Dollar.
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