- Analysts from JP Morgan think that the cryptocurrency value is still unproven
- They highlight how some reputable finance firms are having widespread doubts about crypto assets
- On the other hand, the New York-Based Bank has a more optimistic opinion about blockchain
In a report by Reuters this week, JP Morgan analysts predict that Bitcoin could fall to $1,260, while banks will not benefit from blockchain for at least 3 to 5 years.
Crypto can only succeed if traditional markets collapse
According to the same report, these analysts think that the true value of cryptocurrencies remains unproven. For them, crypto only makes sense if it’s in a hypothetical dystopian event, wherein investors have lost faith in major traditional assets like gold and the U.S. dollar. It also highlighted widespread doubt regarding the assets by reputable finance firms. Although this disbelief has caused some help for blockchain advocates who are still waiting to see it to finally take root.
“Even in extreme scenarios such as a recession or financial crises, there are more liquid and less-complicated instruments for transacting, investing and hedging.”
In 2018, Bitcoin’s price plummeted and lost about three quarters in value. This has caused cautious curiosity from those who are in mainstream finance and some investors that emerged during its ascent in 2017.
JP Morgan uses bitcoin futures trading volumes as a proxy and they said that financial institutions’ participation in crypto markets had slipped in the last six months. This has caused individuals to take up an increasing share of the market.
Even asset managers and pension funds are staying clear. This despite advances in market infrastructure that have seen safer methods to store digital money emerge, with most worried about volatility, security flaws and propensity for illicit usage.
JP Morgan highlights the challenges of using digital coins
JP Morgan thinks that the intended purpose of cryptocurrencies such as bitcoin being used as a form of payment remains challenged, citing that there were no major retailers that started to accept digital coins in 2018.
They even cited Reuters’ analysis of the bitcoin usage in commerce, saying that marketplaces where individuals and small businesses that have control over payment methods would prove to be the most fertile ground when it comes to the spread of cryptocurrencies.
While Bitcoin stood at around $3,565 in afternoon trade, it is likely to drop to around $2,400, they believe. If the bear market persists this year, it could even fall below $1,260. According to CoinMarketCap, the biggest cryptocurrency is now trading at $3,595, down around 1.7% over the past week.
A More Optimistic Opinion on Blockchain
On the other hand, The New York-based bank has a more optimistic opinion on blockchain. According to them, the shared ledger technology can process transactions in just a few minutes without the need to use third-parties for checks. They think that it has the potential for global banks to cut cost and digitalize their complex process.