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JP Morgan has continued to bash bitcoin and cryptocurrencies, saying the value of them is still unproven and that it will be at least another three to five years before blockchain technology makes a difference to the banking sector.
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‘A Dystopian Scenario’
America’s largest bank has reaffirmed that it is still skeptical of cryptocurrencies. JP Morgan said that such assets would only be of any value in a “dystopian scenario” where investors lost faith in gold, the dollar and the global payments system, according to Reuters. “Even in extreme scenarios such as a recession or financial crises, there are more liquid and less complicated instruments for transacting, investing and hedging,” the bank was quoted as saying.
The Manhattan-based firm said it would still be years until blockchain technology catches on with mainstream financial institutions and added that participation by traditional financial organizations in crypto markets had slipped over the last six months with individuals taking up an increasing share of the market. According to Reuters, pension funds and asset managers have stayed clear so far, although there have been some advances in market infrastructure that have seen safer methods to store digital money emerge. Despite this, people still worry about the volatility of cryptocurrencies, security flaws and digital assets being used for illegal purposes, such as money laundering or buying illicit goods.
JP Morgan added in its report that cryptocurrencies being used for payments will stay “challenged” and no major retailers accepted such assets in 2018, though marketplaces where small businesses have control over payment methods would be fruitful in the future for the spread of cryptocurrencies. JP Morgan added that bitcoin core(BTC) could fall below $1,260 if a bear market persists. Analysts at the bank also said that BTC is worth less than the cost to mine it, stating:
The drop in bitcoin prices from around $6,500 throughout much of October to below $4,000 now has increasingly pushed margins further and further negative for just about every region except low-cost Chinese miners.
This isn’t the first time JP Morgan has criticized BTC and cryptocurrencies. A group of analysts at the bank in December said that the prolonged bear market of 2018 was scaring institutional investors away from BTC, adding that financial institutions’ interest in bitcoin trading “appears to be fading” as key metrics like the index of open interest in bitcoin futures have diminished. But a number of experts countered the bank’s skepticism, saying it was likely digital assets would survive.
JP Morgan CEO Jamie Dimon made headlines when he said in 2017 that he had “an issue” with non-fiat cryptocurrencies, insisting that people who dealt in them were “stupid” and that “governments will crush it one day.”
Do you agree with what JP Morgan has said about BTC and cryptocurrencies? Let us know in the comments section below.
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