With the pandemic boosting demand for alternative assets, banking giant JPMorgan’s Joyce Chang sees a new dynamic unfolding in the cryptocurrency space: a battle between banks and fintech. “Fintech is coming into the mainstream from this pandemic as there have really been a demand for digital services — less in-person transactions,” the firm’s chair of global research said in an interview with CNBC.
Bitcoin witnesses its most impressive rally so far.
The activity is playing out as bitcoin as the leading cryptocurrency bitcoin is taking Wall Street on a wild ride. Bitcoin is up about as much as 66% this year and 452% over the last 12 months. “We’ve seen demand from millennials,” JPMorgan’s Chang said. “We’ve seen demand from institutional investors for the first time, as well.” In a research note last week, Chang wrote along with colleague Amy Ho that investors could consider owning up to 1% of bitcoin in a multiasset portfolio. Bitcoin has attracted major institutions this year that helped cryptocurrency reach new all-time highs.
The crypto industry continues to gain mainstream exposure.
“We also are concerned about valuations here,” JPMorgan’s Chang further noted. “We’ve seen that just $11 billion of inflows since last September, which is a high number for bitcoin, has increased the market cap by $700 billion.” She believes demand for alternatives to traditional investments will continue, but her forecast comes with a caveat. “Right now, during a major equity drawdown, we have not seen that it has been an effective hedge,” Chang said. The crypto industry has gained mainstream exposure thanks to bitcoin’s massive rally and increased interest from big institutions like Tesla. The electric car maker giant had invested $1.5 billion in bitcoin in mid-January, which drove cryptocurrency to new heights.