JPMorgan, one of Wall Street’s largest banks and, until recently, an outspoken critic of Bitcoin, has changed its stance on the world’s leading cryptocurrency.
The Bitcoin price, which is now just under USD 10,000 per Bitcoin, has increased by around 30% since the beginning of the year despite the coronavirus crash and the closely observed third supply bottleneck for Bitcoin.
Now JPMorgan, whose CEO once called Bitcoin a “scam”, has said that Bitcoin looks “mostly positive” and that cryptocurrencies have “longevity as an asset class” in the broader sense.
JPMorgan has been described as “Bitcoin’s greatest enemy” but appears to have softened it lately … [+]
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“Although the [bitcoin] The bladder collapsed as dramatically as it inflated. Bitcoin has rarely traded below the cost of production, including the very disorderly conditions that prevailed in March, “JPMorgan analysts said in a report led by US Interest Rate Derivatives Strategy Director Joshua Younger and Cross Asset Research analyst Nikolaos Panigirtzoglou.
Bitcoin briefly plunged below $ 4,000 per bitcoin in March and lost more than half of its value in less than a month as the spreading coronavirus pandemic sparked panic across global markets.
Bitcoin, however, recovered faster than most other assets and was able to make up almost all corona crash losses by the end of April.
Equity markets have also almost entirely returned to pre-coronavirus highs, compounded by unprecedented central bank incentives led by multi-trillion-dollar Fed actions.
While JPMorgan found that Bitcoin price has recently started trading in line with riskier assets like stocks, Bitcoin has kept a price constant above its cost of production.
Others previously cited the cost of creating new bitcoin, a process known as mining, as a potential bitcoin floor price.
However, the net cost of mining Bitcoin has changed recently. The number of bitcoin amounts was rewarded to those who cut the bitcoin network in half in May – from 12.5 bitcoin to 6.25.
Before the halving in May, the cost of mining a bitcoin was estimated at around $ 7,000 by crypto-focused research firm TradeBlock.
Bitcoin price has risen since it was halved for the third time, despite failing to hold profits above $ 10,000 despite repeatedly exceeding the psychological limit.
JPMorgan analysts noted that the price of bitcoin has rarely fallen below the cost of production of bitcoin.
JPMorgan / Bitinfocharts.com
Elsewhere, the report noted that “even during the March crisis, there was little evidence of running momentum or even a grading of material quality among cryptocurrencies,” suggesting that Bitcoin survived its “first stress test” well.
JPMorgan also expects Bitcoin to remain largely a speculative asset.
“”[Bitcoin] Price promotions suggest they continue to serve as an instrument of speculation rather than a medium of exchange or store of value, “according to the JPMorgan report, titled Cryptocurrency, which is conducting its first stress test: digital gold, pyrite, or something in between?
The bitcoin and cryptocurrency community was surprised by JPMorgan’s apparent 180-degree reversal in bitcoin and cryptocurrencies.
Earlier this month, JPMorgan signed the established US Bitcoin and cryptocurrency exchanges Coinbase and Gemini as customers after a long period of verification. Jamie Dimon, CEO of JPMorgan, has been hosting secret meetings with Brian Armstrong, CEO of Coinbase, since 2018.