Strategists at the banking giant JPMorgan have suggested that a one percent portfolio allocation to the leading cryptocurrency Bitcoin would serve as a hedge against fluctuations in traditional asset classes such as stocks, bonds, and commodities. A small percentage allocation was advised to mitigate the risk of any large downturns in the digital asset’s value. The wall street banking giant’s strategists believe allocating some part of the portfolio to bitcoin would serve as a hedge.
Bitcoin is 20% down from its all-time high of $58,000.
The world’s largest cryptocurrency, Bitcoin, has declined 20% since its all-time high of over $58,000 on Feb. 21, but it is up 60% since the beginning of this year. JPM strategists Joyce Chang and Amy Ho stated in a note to clients, “In a multi-asset portfolio, investors can likely add up to 1% of their allocation to cryptocurrencies in order to achieve any efficiency gain in the overall risk-adjusted returns of the portfolio.” Bitcoin has witnessed investments from some major companies in recent times, which might have influenced JPMorgan’s strategists’ opinion.
MicroStrategy buys $1 billion worth of bitcoin.
MicroStrategy announced Wednesday that it bought just over $1 billion worth of additional bitcoin, just days after finalizing another sale of convertible debt. The purchase of 19,452 bitcoins puts the company’s total holdings of the leading cryptocurrency at 90,531. The Virginia-based enterprise software company said it paid an average price of $52,765 per bitcoin, including fees and other expenses. Since its first bitcoin purchase, the firm has completed two convertible debt offerings to raise capital to finance additional purchases. The most recent offering was completed last week, generating roughly $1.03 billion in net proceeds; the notes bear a 0% coupon rate.