2024-03-08 07:04:15
A report released by JP Morgan on Thursday said that taking into account volatility, Bitcoin has surpassed gold in investors’ portfolios.
(Previous summary: JPMorgan Chase: Bitcoin may fall to US$42,000 following the April halving, is there another mining disaster tsunami?)
(Background supplement: The largest bank in the United States｜JP Morgan Chase is rumored to launch an “active Bitcoin fund” for private wealth clients)
JP Morgan, the largest commercial bank in the United States, released its latest report on Thursday. The JP Morgan analyst team headed by Nikolaos Panigirtzoglou stated that there is an argument that Bitcoin, which has been likened to “digital gold”, plays an important role in investors’ investment portfolios. The notional weighting should match gold, but this ignores Bitcoin risk and volatility.
according to The Block、DL News According to reports, JPMorgan Chase analysts pointed out in a report that the total market value of Bitcoin is now approximately US$1.3 trillion, while the value of the amount of gold used for investment purposes is approximately US$3.3 trillion, which is still a 153% gap. Based on this view, Bitcoin’s value might theoretically rise by 153% to match gold’s levels.
But analysts say that calculation ignores an important factor: risk and volatility.
Since Bitcoin is approximately 3.7 times more volatile than gold, it is unrealistic to expect Bitcoin to match gold in nominal amounts in an investor’s portfolio.
In other words, if cryptocurrencies were truly viewed as gold-like assets, investors would consider its volatility and give it a smaller share in their portfolios.
Considering volatility, Bitcoin “has surpassed gold” in portfolio allocation
However, the report said that when volatility indicators are taken into account, Bitcoin “has surpassed gold” in investors’ portfolios.
Analysts explain that, adjusting for Bitcoin volatility and assuming that Bitcoin is comparable to gold in terms of risk capital (money earmarked for investment activities), Bitcoin’s total market capitalization would shrink to $90 million (divide $3.3 trillion by 3.7), while Bitcoin price should be at $45,000, well below the current price level of $67,137.
So in other words, at Bitcoin’s current price of $66,000, the implied allocation to Bitcoin in investors’ portfolios already exceeds that of gold on a volatility-adjusted basis.
This also means that investors may not invest in Bitcoin out of consideration for gold-like assets, but for different reasons.
Further reading: JP Morgan warns: Bitcoin has gone too far!There will be no influx of new funds following the approval of spot ETF, and the BTC halving narrative is questionable
In the next 2 to 3 years, Bitcoin spot ETFs may see an inflow of 62 billion magnesium.
In addition, JP Morgan analysts also mentioned in the report that of the total US$3.3 trillion of gold used for investment purposes, only 7% (or US$230 billion) is held in the form of funds, and the rest is held in the form of gold bars and gold coins. have.
Based on the assumption that Bitcoin’s volatility is 3.7 times that of gold, the potential size of Bitcoin spot ETF inflows in the next 2 to 3 years may be approximately US$62 billion (230 billion divided by 3.7).
However, analysts also said that considering GBTC’s total outflows to date are $10 billion, the total net inflows into the Bitcoin spot ETF are $9 billion. Therefore, it is suspected that the current implied net inflow of funds into the Bitcoin spot ETF may be caused by the continuous rotation of existing instruments and venues into the spot ETF, rather than representing new funds entering the cryptocurrency field.
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