A recent report by multinational investment bank, JPMorgan reveals that institutional investors are more interested in Bitcoin investment opportunities.
The report shows that Bitcoin’s volatility reduced last year. This presents a positive change for the cryptocurrency, although it is still five times more volatile than traditional markets.
According to the report,
“Cryptocurrency volatility has fallen, but remains about five times greater than core markets like Equities or hedges such as Commodities.”
The report shows that Nigeria is among the top nations with significant dependence on cryptocurrencies. It suggests that private money like cryptocurrencies serves as a unique hedge for states where the risk to the payment system exist.
“As the global economy enters year 12 of its longestever expansion, there is no shortage of risks to hedge, ranging from the somewhat familiar (recession, inflation, military conflict, trade war, currency war) to the newer (pandemics, climate change catastrophes, systemic cyberattack). Many of these events have occurred with sufficient frequency over the past 50 years of modern finance that investors and risk managers think they know how best to hedge via defensive assets”
The report also outlines the case for stablecoins. It highlights the fact that they remain stable when most market indices indicate significant fluctuations. Traders typically use stablecoins as a hedge in such situations.
The use of stablecoins like Tether has increased in 2019. JPMorgan suggests that their use could grow substantially in the future. There are, however, legal hurdles that must be faced in the wake of the stablecoin era. JPMorgan is among several big corporations creating their own stablecoins. It has faced several regulatory hurdles in creating its stablecoin.
JPMorgan’s interest in cryptocurrency has grown significantly, representing a huge change from when its leadership publicly criticised crypto. JPMorgan was recently in talks with ConsenSys, a stakeholder in Ethereum which could be used to boost its Ethereum-based projects.