JP Morgan sees opportunity in digital assets

News / Tim Stolte

JP Morgan, the largest bank in the US, wrote that it views the cryptomarket as its favorite alternative investment category in a statement to its customers. Investments that are not within the stock or bond markets, like resources, digital assets and real estate are labeled as “alternative investments”.

The bank indicated that the sentiment in the cryptomarket, especially after the destabilisation of TerraUSD and LUNA, has dropped to a new low. The re-pricing going on in the market makes the current moment a good opportunity for long-term investors to get in, according to JP Morgan. Nikolaos Panigirtzoglou, a strategist at JP Morgan, thinks that the cryptomarket has passed the point of capitulation after the recent move downward. Next to that, the bank estimates the current fair value of bitcoin, based on the bitcoin-gold volatility ratio, to be around $38,000. That’s roughly 30% more than the current price.

Whether or not JP Morgan’s hunch is correct remains to be seen, since it’s hard to predict if the capitulation is really behind us. The market still seems to be in disagreement with JP Morgan’s fair value of $38,000. It’s at least a good sign that an institutional party like JP Morgan has pronounced confidence in the crypto markets in a time of uncertainty.

JP Morgan isn’t just pronouncing confidence either; they have in fact become quite active in the space. Last week the fact that the bank was using blockchain in their collateral  arrangements came to light. A first test transaction happened on May 20th, where tokenised shares of Blackrock were used as collateral and transferred on a private blockchain. The goal of this new development is that investors can offer a wider array of assets, including digital assets, as collateral to JP Morgan.

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