Analysts at JP Morgan have stated that the value of cryptocurrencies is unproven and the underlying technology that powers them, the blockchain, is over-stated in an exclusive report published by Reuters.
Blockchain technology will not have any impact on banks for at least three to five years said the analysts. Large financial institutions have been inching closer to both blockchain and cryptocurrencies with established companies like Fidelity and State Street looking to launch products for the same.
JP Morgan harshly stated that virtual and decentralized currencies only make sense in a dystopian world, one which is detached from regular fiat with investors losing their faith in traditional investment vehicles like gold, the US dollar, asset reserves, and the overall global financial system.
The analysts further opined on the prices of the top crypto in the market, Bitcoin, which currently trades at $3,600, will have cost support at $2,400 and if the current prolonged bear market continues, the top coin, which holds over 53 percent of the market, could fall to $1,260.
A report by JP Morgan on cryptocurrency and blockchain read:
“Even in extreme scenarios such as a recession or financial crises, there are more liquid and less-complicated instruments for transacting, investing and hedging.”
Despite 2019 being pegged as the year institutional investors would arrive into the cryptocurrency world, individuals have been tightening their grip on the market, said the analysts. They further added that financial institutions have slipped out of the market in the past six months as the bearish market persisted, using the BTC futures’ trading volume as a proxy.
Asset managers are still fearful of the volatility, security threat and risk of illicit posed by cryptocurrencies to add it into their portfolios, despite the recent advancements and checks that are insulating the virtual currency industry.
Payments have been an area of focus for several cryptos, with several top-coins like XRP promoting itself as the payment mainstay of the virtual currency world. The analysts said that the crypto-payments objective will be “challenged” as large retailers are not accepting this sort of payment. They further added that small businesses will be the main users of cryptocurrencies for payments.
Blockchain technology, however, is seen more optimistically by the analysts. They believe that blockchain can bring down the costs for banks and help digitize complex processes, especially in the area of trade finance.
JP Morgan’s negative stance towards cryptocurrencies is nothing new, the CEO Jamie Dimon is more popularly known as the “Bitcoin basher” for his outspoken criticism of the top-crypto. Back in 2017, he called Bitcoin a “fraud,” and that it would eventually crash to zero. Dimon stated that he supports a “fiat-crypto” one that is digital and pegged to an existing currency, but he does not support cryptocurrencies because they “have no actual value.”
He certainly does not mince his words when speaking of Bitcoin, stating:
“I could care less what bitcoin trades for, how it trades, why it trades, who trades it. If you’re stupid enough to buy it, you’ll pay the price for it one day. I’ve also told people that it can trade at $100,000 before it trades to zero.”