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JPMorgan changes its tune on bitcoin


JPMorgan, one of Wall Street’s biggest banks and up until recently an outspoken bitcoin critic, has changed its tune on the world’s number one cryptocurrency, Billy Bambrough writes in Forbes. 

The bitcoin price, now hovering at just under $10,000 per bitcoin, has added around 30% since the beginning of the year despite the coronavirus crash and bitcoin’s closely-watched third supply squeeze. 

Now, JPMorgan, whose chief executive once branded bitcoin a “fraud,” has said bitcoin is looking “mostly positive” and cryptocurrencies more broadly have “longevity as an asset class.”

“Though the [bitcoin] bubble collapsed as dramatically as it inflated, bitcoin has rarely traded below the cost of production, including the very disorderly conditions that prevailed in March,” said JPMorgan analysts in a report led by head of US interest rate derivatives strategy Joshua Younger and cross asset research analyst Nikolaos Panigirtzoglou.

Bitcoin briefly crashed to under $4,000 per bitcoin in March, losing over half of its value in under month as the spreading coronavirus pandemic sent panic through global markets.

Bitcoin bounced back quicker than most other assets, however, recovering almost all of its corona-crash losses by the end of April. 

Equity markets have also now almost entirely returned to pre-coronavirus highs, boosted by unprecedented central bank stimulus led by multi-trillion dollar measures from the US Federal Reserve. 

While JPMorgan found the bitcoin price has recently begun to trade inline with riskier assets like equities, bitcoin has consistently maintained a price above its production costs. 

Others have previously said the cost of creating new bitcoin, a process known as mining, is a potential bitcoin price floor.

However, the net cost of bitcoin mining has changed recently, with the number of bitcoin rewarded to those that maintain the bitcoin network cut by half in May –dropping from 12.5 bitcoin to 6.25.



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