Big bank JPMorgan evaluated that the US, Inc., is not bold enough to follow Tesla’s bitcoin investment. Although Tesla has been leading the way to disclose its Bitcoin investment and payment policies, he said, don’t expect that there will be a big company in the U.S. who will follow Tesla right away.
According to Bloomberg on the 10th, strategists in JPMorgan pointed out in their report that “the biggest issue in the question of whether major corporate financial officers will follow Tesla is the volatility of Bitcoin.” It is difficult for American companies to act like Tesla right away because the risk of putting bitcoin, which has a huge fluctuation in price, into corporate assets is so great.
Most of a company’s financial portfolio is filled with bank deposits, money market funds, and short-term bonds, with an average annual fluctuation of less than 1%. On the other hand, Bitcoin has an average fluctuation of 5.2% per day, and an annual average of 80%. “Even if only 1% of corporate assets are allocated to Bitcoin, the volatility of the entire portfolio will skyrocket to 8%,” JPMorgan said.
However, Bitcoin investors are pouring out a rosy prospect that this cryptocurrency will become the mainstream market-leading in the periphery like Tesla. Michael Novogratz, founder of cryptocurrency asset manager Galaxy Digital, was optimistic that if more companies were like Tesla, Bitcoin could soar to $10 at the end of this year. His outlook is twice that of the current market price (about $46,200).
JPMorgan said, “Tesla could raise the price of bitcoin in the short term,” but predicted that “how long the bitcoin rally will last will depend on the less speculative’institutional’ fund flow.” It is explained that it depends on how institutions such as the’Grayscale Bitcoin Trust’, the world’s largest Bitcoin indirect investment product, operate.