Cryptocurrencies have had a difficult start to the year, thanks in large part to several macroeconomic issues, such as inflation and the Ukraine conflict, which caused a sell-off in assets deemed risky by investors.
The crypto market has lost over $1 trillion in value since Jan., with Bitcoin and Ether declining 38% and 48%, respectively. And this month’s failure of the stablecoin TerraUSD has done nothing to improve the bearish mood around the space, prompting many to ask whether we’re in the midst of a “cryptocurrency winter.”
This week, however, crypto investors have received some much-needed assistance from an unexpected company: JPMorgan Chase.
The investment bank’s strategists, headed by Nikolaos Panigirtzoglou, stated in a Wednesday note that they think Bitcoin has “huge upside potential.”
The strategists kept their $38,000 value target for BTC, which implies a potential 29 percent increase from the crypto’s Wednesday trading level of $29,430.
“Going forward, we expect Bitcoin and other cryptocurrency markets to appreciate,” the experts added.
JPMorgan now considers digital assets and hedge funds to be its “preferred” asset classes, with real estate having been relegated to the sidelines as mortgage rates climb. Alternative investments, on the other hand, have been downgraded by the investment bank’s experts to “underweight” from “overweight,” owing in part to persistent macroeconomic issues.
The crypto shift at JPMorgan
JPMorgan has made significant progress in the crypto industry since 2021, when it granted its wealth management customers access to six cryptocurrency funds, including the Grayscale BTC Trust. In February, the bank announced that it would be making a “strategic investment” in TRM Labs.
Despite Jamie Dimon’s history as a crypto antagonist, the CEO has said that the firm will invest in blockchain technology. In October 2017, he labeled Bitcoin a “fraud” and claimed that the leading cryptocurrency was “worthless.”
Despite his reservations, Dimon said that his clients are “adults” who are free to make their own decisions. “So if they want to acquire Bitcoin, we cannot custody it, but we can provide them with real, as clean as possible access.”
Since then, Jamie Dimon’s position on crypto has remained negative, but he praised blockchain technology at the Wall Street Journal’s CEO Summit in May, stating that it has shown to be a useful innovation.
On Wednesday, JPMorgan’s traders suggested that despite the newest crypto sell-off, there is zero evidence that venture capital funding in the industry is decreasing. To their argument, Andreessen Horowitz, a VC firm, announced on Wednesday that it had raised $4.5 billion for its fourth cryptocurrency fund in order to take advantage of falling prices.
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