Don't Expect Big Companies to Pursue Tesla's Shift to Bitcoin, JPMorgan Says
Bitcoin Enthusiast – Luke
While the Crypto industry wants more major companies to imitate Tesla's purchasing of Bitcoin, JPMorgan's analysts do not believe it will happen soon.
Analysts at JPMorgan Chase, including some of the biggest investment banks in the United States, assume that Tesla’ $1.5 billion Bitcoin (BTC) purchase will not encourage as many similar investments as the community may hope.
A team of JPMorgan strategists led by Nikolaos Panigirtzoglou stated that the extremely unpredictable nature of buying Bitcoin could hold conventional corporate trustees at bay from the popular Cryptocurrency. “The main issue with the idea that mainstream corporate treasurers will follow the example of Tesla is the volatility of Bitcoin,” Bloomberg recorded Tuesday.
As per JPMorgan, even a limited amount of Bitcoin in corporate treasury accounts will be correlated with a high degree of risk since those businesses typically retain their portfolio volatility at about 1%. Even if Bitcoin made up 1% of total allocations, “would cause a big increase in the volatility of the overall portfolio,” theoretically pushing portfolio volatility up due to Bitcoin's 80% annualized volatility, the analysts stated.
Elon Musk's Tesla Motors hit the headlines on Feb. 8 by disclosing a $1.5 billion acquisition of Bitcoin in a filing with the United States Securities and Exchange Commission. The news sparked a parabolic surge in the already market rallying economy, with Bitcoin touching a new all-time high of over $48,000.
Following the massive change, several key Crypto trading personalities including Galaxy Digital founder Michael Novogratz expressed trust that "any company in America" will adopt Tesla's move to devote part of their balance sheets to Bitcoin investments. Grayscale Investments CEO Michael Sonnenshein also projected that the future will eventually see a lot of “other visionary leaders and disruptive companies actually realizing it has really moved from why to why not.” Other Crypto players have suggested that the U.S. tech giant Apple might be the next institutional participant to accept the Crypto asset management landscape.