JPMorgan suggested that 1% portfolio allocation to Bitcoin would serve as a hedge against fluctuations in traditional asset classes
According to strategists at JPMorgan, the one percent portfolio allocation for Bitcoin will act as a hedge against the volatility of traditional asset classes like stocks, bonds, and commodities.
JPMorgan note to clients endorses 1% allocation to Bitcoin as a hedge
Among them, some argue that allocation should be done to minimize the risk of any major drop in Bitcoin’s value. Bitcoin is down 20% since an all-time high of more than $ 58,000 on Feb. 21, but it is up 60% since the beginning of the year.
According to Bloomberg, JPM strategists Joyce Chang and Amy Ho stated in a note to clients as follows:
“In a multi-asset portfolio, investors can likely add up to 1% of their allocation to cryptocurrencies in order to achieve any efficiency gain in the overall risk-adjusted returns of the portfolio.”
The endorsement came from large 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 plans to hold, transfer and issue cryptocurrencies to its customers.
JPMorgan analysts added that cryptocurrencies should be seen as an investment vehicle, not as financing of currencies like USD or JPY.
The comments seem to contradict those made earlier this month by other investment banking strategists who have claimed that cryptocurrencies continue to be ranked as the worst-case hedge. with great discounts on the stock market.
Speaking to CNBC on Feb. 17, Cathie Wood of Ark Investment Management observed that if all firms put 10% of their cash in Bitcoin, it would increase by $ 200,000.
Buying cryptocurrencies has soared in 2021, and it’s not just institutions that are uploading. Trading company Robinhood reported that about 6 million new users bought cryptocurrency on the platform in just the first two months of this year.
The numbers have decreased YoY showing that the bullish momentum from the retail sector is still strong despite the recent correction. At press time, BTC has dropped another 7% over the past 24 hours to trade at $ 47,100.
You can see the BTC price here.
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