What of your overall portfolio to allocate to BTC? JP Morgan responds By Investing.com
We can think of what we want from and from cryptocurrencies, but the fact is that investors, individuals and professionals alike, ask themselves what role must play in a standard investment portfolio.
John Normand, an analyst at JPMorgan (NYSE 🙂 (a bank that hit the headlines a few weeks ago with a forecast of $ 146,000 for BTC) , studied the issue. The answer is that he doesn’t see a big role for cryptocurrency, but he hasn’t ruled out the possibility either.
“Small allocations (up to 2%) to cryptocurrencies improve the portfolio efficiency thanks to high returns and moderate correlations, but the persistence of this diversification effect is questionable. Current prices are so much higher than production costs that the possibility of a violent reversal is a recurring concern. Normand said.
In addition, the democratization of cryptocurrencies – especially among retail investors – increases its correlation with all cyclical assets. “If continued, this development could erode the diversification opportunities (offered by BTC) over time,” he said.