The team of analysts led by Nikolaos Panigirtzoglou at JPMorgan Chase released a market liquidity report yesterday, pointing out that considering Bitcoin as digital gold, the most similar asset to it naturally is gold. JPMorgan Chase analysts noted that when comparing the “nominal value” of these two assets, the total value of Bitcoin has reached $1.3 trillion, while gold used for investment purposes is $3.3 trillion, which means that the proportion of gold in investment portfolios is still higher than that of Bitcoin.
Theoretically, if the value of Bitcoin in investors’ portfolios is to be equal to that of gold, it means that its value still has a 153% potential increase. However, JPMorgan Chase added that this calculation overlooks an important factor, which is “risk”.
Analysts stated that when investors allocate across asset classes, they consider risk and volatility. Given that the volatility of Bitcoin is approximately 3.7 times that of gold, their conclusion is that “expecting the nominal amount of Bitcoin in investors’ portfolios to match gold is unrealistic”. In other words, if cryptocurrencies are truly seen as digital substitutes for gold, investors would consider their volatility and allocate them a smaller share in their portfolios.
Analysts believe that if Bitcoin is truly considered a safe haven asset like gold, the implied allocation would be reduced to $0.9 trillion ($3.3 trillion divided by 3.7), and the total value of Bitcoin would not exceed $900 billion.
Therefore, from a volatility-adjusted perspective, the position of Bitcoin in investors’ portfolios is already larger than that of gold. This indicates that Bitcoin investors are not buying it out of “safe haven or gold-like considerations”, but for different reasons.
Bitcoin Surge May Delay Fed Rate Cut Plans
In addition to discussing the value between Bitcoin and gold, JPMorgan Chase analysts also pointed out in the report that the record-breaking surge in Bitcoin may lead to the Federal Reserve delaying its rate cut plans at the end of this year.
JPMorgan Chase strategist Marko Kolanovic stated in a recent report that Bitcoin rising above $60,000, coupled with stock markets reaching all-time highs, shows that a “bubble” is starting to accumulate in risk assets, which could ultimately prompt the Federal Reserve to postpone its planned rate cuts. Marko Kolanovic said:
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