The actual supply of BTC is way lower than the consistently increasing demand of the cryptocurrency, and investors should not include more than 1% of Bitcoin in their portfolios, according to JP Morgan.
JPM has stated that various analysts across the market and strategists, who represent large multinational investment banks in the US, support their advice of including only a fraction of Bitcoin in their portfolios.
The analysts from JP Morgan also emphasized the fact that the liquid supply of BTC is vanishing because large corporations and institutions are buying huge amounts of Bitcoin just to hold, and they are doing it in a very quick manner.
JP Morgan’s Advice
The most pressing concern for the investors and the hottest debate in the market is that what percentage- high or low, of the total portfolio should be invested to acquire Bitcoin. The answer to this is not so easy. People who are Bitcoin enthusiasts say that an investor should invest all their capital into BTC in order to get maximum returns, while the other analysts say that the portfolio should be more diverse in order to give a cushion for any possible losses.
Before last year, there was apparently no one besides that Bitcoin and crypto community who advocated in favor of investing in Bitcoin. The first person to publicly take this step after the market crash following COVID-19 was Paul Tudor Jones III, a legendary legacy investor.
Bloomberg posted that JP Morgan Chase & Co. is very sensitive towards it, but it still says the investors should consider hedging Bitcoin for possible returns.
However, it is advised by the analysts that an investor should also consider investing in fiat currencies like the dollar or yen if they want to play the long game and don’t want to be associated with the risk factor which the cryptocurrencies carry with them.
JP Morgan also addressed the fact that Bitcoin’s liquid supply has been decreasing due to the enormous demand over the past few months. The reason for that is the investments of many big corporations like Tesla in Bitcoin, and also the production of new Bitcoins was cut in half after May in 2020.