Is Bitcoin Here to Stay? Crypto’s Are More Structured and Resilient Than Other Assets in These Uncertain Times
The Coronavirus market selloff in the middle of March was bitcoin’s first major crash test and the cryptocurrency successfully overcame it, according to JPMorgan’s most recent report, which says that Bitcoin is here to stay.
After March’s huge selloff alongside every other asset, Bitcoin emerged stronger than before. After falling from 9,000 USD in the middle of March, the cryptocurrency recouped all its losses, and even tipped above 10,000 USD, and was last trading at 9,416.00 USD, up 0.76% on the day.
After analysing cryptocurrencies’ trading patterns in response to the Coronavirus pandemic, JPMorgan’s experts concluded that cryptos have “longevity as an asset class.”
But the experts advised that Bitcoin is more likely to be used as a speculation vehicle rather than a store of value.
JPMorgan’s experts led by Joshua Younger and Nikolaos Panigirtzoglou said in their report that the “Price action points to their continued use more as a vehicle for speculation than a medium of exchange or store of value.”
Additionally, there were no significant signs that the crypto investors were moving to more liquid parts of the market in a bid to seek safety during the selloff. “That suggests that there is little evidence of run dynamics, or even material quality tiering among cryptocurrencies, even during the throws of the crisis in March,” the experts advised.
In addition, the report advised that Bitcoin appears to have a high correlation to riskier asset classes like equities.
One of the major finds of the report was that Bitcoin’s valuation didn’t diverge much from its inherent levels even during the height of the March selloff, which implies that it rarely traded below the cost to mine.
The report also concluded that Bitcoin’s market structure is looking more resilient than that of currencies, equities, Treasuries, and gold. To analyse this, the experts at JPMorgan examined the bid-offer spread of the order book, which shows liquidity.
What’s more, the results of the report showed that even though Bitcoin saw a massive price drop, its ability to recover was much faster than other asset classes.
March’s crash was Bitcoin’s first major test in a crisis situation since its inception just over a decade ago.
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