Strategists at JPMorgan Chase, one of the largest investment banks in the United States, They believe that Tesla’s purchase of Bitcoin (BTC) for $ 1.5 billion will not necessarily trigger a wave of similar investments.
A group of JPMorgan strategists led by Nikolaos Panigirtzoglou argued that the highly volatile nature of Bitcoin could keep mainstream corporate treasurers away from Bitcoin. “The main problem with the idea that traditional corporate treasurers will follow Tesla’s lead is the volatility of Bitcoin,” strategists wrote in a note to investors, Bloomberg reported Tuesday.
According to JPMorgan, Even a small holding of a small portion of Bitcoin in corporate treasury portfolios would be associated with a high level of risk, since these companies tend to keep their portfolio volatility close to 1%. Even if Bitcoin accounts for 1% of total allocations, it would “cause a large increase in overall portfolio volatility,” which could drive portfolio volatility up to 8% due to the 80% annualized volatility of Bitcoin, strategists said.
Elon Musk’s Tesla Motors made headlines on February 8 at announce a $ 1.5 billion purchase of Bitcoin in a filing with the US Securities and Exchange Commission The news fueled a parabolic ascent in the cryptocurrency market that was already rising, and Bitcoin subsequently hit a new all-time high above $ 48,000.
Following the big move in Bitcoin, a number of important figures within the crypto space, including the founder of Galaxy Digital, Michael Novogratz, expressed confidence that “all companies in the United States” will follow Tesla’s decision to allocate a portion of its balance sheet to Bitcoin. The CEO of Grayscale Investments, Michael Sonnenshein, too predicted that the world will soon see many “other visionary leaders and disruptive companies really realize that it has really moved from why to why not.”
Some names in the cryptocurrency world also speculated that US tech giant Apple could be the next institutional player to adopt the crypto asset.