JPMorgan strategist has no faith in cryptocurrencies

JPMorgan strategist has no faith in cryptocurrencies

Bitcoin BTCUSD, + 2.43%, dipped below $ 34,000 in January, fueling fears of a crypto winter, but has since climbed to over $ 42,000 this morning. Shiba Inu, a meme coin, jumped about 25% to $ 0.000027.

The analyst raised some issues related to bitcoin and other cryptocurrencies. First, there is the question of whether bitcoin is a safe haven for money. According to Cembalest, there may be a digital store of value. Bitcoin, on the other hand, fails to meet two criteria: volatility settling in a range consistent with the investment reserve of value and value growing or stable when systemic risks and / or inflation rise.

Cembalest stated that “bitcoin's volatility continues to be ridiculously high and its volatility often increases when stock market volatility also increases. This volatility could be the byproduct of the bitcoin concentration: 2% of bitcoin holders own 72% of its value ".

Another source of volatility for crypto currencies is pump-and maneuvers -dump, he claimed. "Such schemes and other activities that would be prohibited in regular securities markets are not by definition illegal on decentralized blockchains." Secondly, the strategist compared bitcoin with hydrogen and green energy projects, wondering which companies would have earned in this light and which would have remained at zero.

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Cembalest has stated that they do not believe that bitcoin or other cryptocurrencies have a credible valuation methodology. "Some use cases for cryptocurrencies will last, but valuations assume wider and faster adoption," said Cembalest.

Not convinced that bitcoin is a viable medium of exchange for commercial transactions . "Bitcoin is currently not a medium of exchange except in some niche cases," said Cembalest. “The decline in the number of bitcoin transactions per day and the spikes in execution costs bear no resemblance to any working fiat currency.”

He added that “the higher the login fees, the greater the impediments to users who would migrate to the blockchain to reduce costs. I don't know how this tension is resolved ”. Bitcoin's volatility, meanwhile, "continues to be ridiculously high", monitoring action in the equity markets.

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