For Wall Street bank, JP Morgan, Bitcoin isn’t near as valuable as enthusiasts will have you believe. Analysts at the bank also say blockchain technology won’t make any meaningful dent on the banking industry in the next three to five years.
Bitcoin’s Useful Only in a Dystopian World
According to Reuters, JP Morgan analysts are skeptical about the value of Bitcoin and cryptocurrencies in general within the context of the present-day economic reality. In a recently published report, the bank said that cryptos only make sense in a dystopian world.
Commenting further in the report, Jan Loeys, the managing director of JP Morgan, said:
“We have long been skeptical of cryptocurrencies’ value in most environments other than a dystopian one characterized by a loss of faith in all major reserve assets.”
According to Loeys, Bitcoin wouldn’t have much value in extreme economic situations like market slumps and recessions. Instead, other assets with better liquidity stand a better chance of being suitable hedges during those situations.
This narrative flies in the face of the established belief that Bitcoin and some other cryptos could function as haven assets during a recession. This notion takes credence from the fact that Bitcoin remains uncorrelated to the mainstream market.
Bitcoin Could Fall Below $1,260
The report also went on further to declare that the top-ranked asset could fall even lower if the bear market persists. In the report, Loey predicted a price of $1,260 for Bitcoin.
The JP Morgan executive also contradicted the belief that the present bear market presented an opportunity to acquire cryptos on the cheap against a future price rally. Commenting on the matter, Loey said:
“Developments over the past year have not altered our reservations about these assets’ role in global portfolios, even if their novelty value can remain high indefinitely.”
The Wall Street bank says that there is declining institutional interest, as well as the lack of real-world use cases for cryptos. According to the report, hedge funds and other big-name players have so far stayed away from the asset class.
For Bitcoin enthusiasts, the debate is split between whether BTC has already bottomed out or is in the process of finding a new price bottom. However, both sides of the debate agree that the next step in the cycle is a consolidation before the start of a new bull rally.
Concerning institutional interest, there projects like Bakkt, owned by Intercontinental Exchange (ICE) expected to go live later in the year. 2018 also saw significant investments from Fidelity and Yale University in the cryptocurrency space.