Financial services giant JPMorgan Chasesaid it was cautious on real estate in a note to investors this week and replaced real estate withcryptocurrency as its preferred alternative asset.
The move comesasrising interest rates put upward pressure oncommercial real estate cap rates and near-term choppiness emerges in investment markets as both buyers and sellers adjust their expectations, Wealth Management reports. Other pressures on CRE values include higher construction costs andmore fundamental questionsabout how assets are valued.
“A potential lagged repricing keeps us more cautious on private equity, private debt and real estate over the coming quarters,” bank analysts wrotein a widely reported note to investors on Wednesday. “We thus replace real estate with digital assets as our preferred alternative asset class along with hedge funds.”
The JPMorgan analysts, led by Managing Director Nikolaos Panigirtzoglou, also said that bitcoin is undervalued, asserting that fair value for that particular cryptocurrency remained unchanged at roughly $38K each.As of Thursday, bitcoin was trading at about $29,200, and its value to the dollar has dropped about 25% over the last year.
“The past month's crypto market correction looks more like capitulation relative to last January/February and going forward we see upside for Bitcoin and crypto markets more generally," theanalystswrote.
Alternative asset classes generally aren’t equities or cash, differing from traditional investment types because they aren’t easily sold or converted into cash, according to the Harvard Business Review. Alternative assets also tend to have a low correlation to standard asset classes, meaning they often don’t move in the same direction as more traditional assets in response to macroeconomic trends.
Real estate has long been a recognized alternative asset class, along with the likes of commodities, collectibles, hedge funds, and private equity and debt.
In 2021, the bank created its own crypto, JPM Coin, which it said is a “shared ledger system that serves as a payment rail and deposit account ledger, enabling participating J.P. Morgan clients to transfer US dollars held on deposit with J.P. Morgan.”
More recently, JPMorgan made an investment in blockchain intelligence company TRM Labs, which specializes in crypto compliance and risk management tech. The bank also unveiled avirtual lounge in blockchain-based world Decentraland in February,asserting in a report that the metaverse has a market opportunity of $1T in yearly revenue.
FAQs
In a note to clients issued Wednesday, the bank has also stated that it is replacing real estate with digital, or crypto, assets as its preferred alternative asset class along with hedge funds, citing “potential lagged repricing” in private equity, private debt and real estate.
Is JPMorgan getting into crypto? ›
JPMorgan disclosed investments totaling $731,246 in BlackRock's iShares Bitcoin Trust (IBIT), Bitwise's Bitcoin ETF (BITB), Fidelity's Wise Origin Bitcoin Fund (FBTC), and Grayscale Bitcoin Trust (GBTC), with the majority, $477,425, in IBIT.
Is Chase going to digital currency? ›
JPMorgan Chase's digital token, JPM Coin, is currently processing $1 billion in transactions daily, and the financial giant is planning on making the currency more widely available.
Are Cryptos becoming alternative assets? ›
Second, cryptocurrencies can be seen as an alternative for portfolio diversification, if investors are looking for higher compensation from riskier assets (a more in-depth analysis can be found in Naimy, El Chidiac, and El Khoury 2020).
What is the name of JPMorgan's cryptocurrency? ›
A case in point is JPMorgan Chase's “JPM Coin,” a corporate stablecoin launched shortly after the 2017 crypto bubble that seemed doomed to languish as a proof of concept that would never catch on in the real world.
What big banks are getting into crypto? ›
Large banks like JPMorgan Chase, Goldman Sachs and Bank of America have launched crypto trading desks, and wealth management firms, such as Morgan Stanley and Wells Fargo, provide access to crypto through their products and funds.
Why doesn t Chase allow crypto? ›
Why don't you allow crypto asset payments? We've made this decision because fraudsters often use crypto assets to steal large sums of money from people. Blocking these payments is one of the ways we help keep you and your money safe.
Is the US coming out with a digital currency? ›
Is the US Going to Digital Dollar? As of June 2024, the US Federal Reserve has not decided to transition to a CBDC or supplement its existing monetary system with one. It is researching the effects a CBDC would have on the dollar, the US, and the global economy.
What banks are switching to digital currency? ›
The pilot will test how banks using digital dollar tokens in a common database can speed up payments. Participating banks include BNY Mellon, Citi, HSBC, Mastercard, PNC Bank, TD Bank, Truist, U.S. Bank and Wells Fargo.
What happens if the US dollar goes digital? ›
Benefits of becoming a digital currency
There are certainly benefits to a digital dollar fully run and backed by the Fed. The money would be transferred almost instantaneously from bank accounts without having to wait days for the transactions to clear multiple financial institutions.
As long as there are governments, there will be demand for that nation's currency. Bitcoin will not replace currency but instead offer people more choices as to which currency they can use to trade and store value and its technology will change how we conduct payments, banking and other financial transactions.
Could crypto replace banks? ›
Bitcoin's technology relies on algorithmic trust, and its decentralized system offers an alternative to the current system. However, because of the issues it raises and faces, it is unlikely that it will replace central banks anytime soon.
Is real estate an alternative investment? ›
Alternative investments include such assets as real estate and commodities, which are arguably two of the oldest types of investments. Alternative investments also include non-traditional approaches to investing within special vehicles, such as private equity funds and hedge funds.
Is JPMorgan accepting crypto? ›
JP Morgan Chase
It offers crypto-friendly banking services to selected exchanges and digital asset firms, with a strong focus on risk management and compliance. JP Morgan Chase also provides institutional-grade research on crypto markets, aiding clients in making informed investment decisions.
What does Jamie Dimon think of cryptocurrency? ›
Bitcoin is a scam and fails as a currency, Jamie Dimon said. "If you mean crypto like bitcoin, I've always said it's a fraud," the JPMorgan CEO told Bloomberg TV on Wednesday. "If they think they're a currency, there's no hope for it.
How much is a JPM Coin worth? ›
Is JP Morgan using XCN? ›
In 2021, J.P. Morgan's dedicated blockchain business unit, Onyx, developed the Onyx token (XCN). It is essentially a digital asset designed to revolutionise cross-border payments and improve peer-to-peer lending and borrowing within the decentralised finance (DeFi) ecosystem.
What is the price of Bitcoin prediction for JP Morgan? ›
A new report by JPMorgan warns of a looming price correction for the world's top cryptocurrency. Bitcoin's price—above $63,000 on Thursday—has reached heights not seen in two years, but the coin's upcoming halving event could push prices down to $42,000, according to analysts at JPMorgan.
Will JPMorgan go under? ›
The Probability of Bankruptcy of JPMorgan Chase & Co (JPM) is 2.8% . This number represents the probability that JPMorgan will face financial distress in the next 24 months given its current fundamentals and market conditions.
