With the pandemic increasing the demand for alternative assets, JP Morgan Securities’ Joyce Chang sees a new dynamic in the cryptocurrency space: a battle between banks and fintech.
“Fintech is entering the mainstream due to this pandemic as the demand for digital services has really increased – fewer in-person transactions,” the company’s chairman of global research told CNBC’s Trading Nation on Thursday.
The activity plays out as Bitcoin, the predominant cryptocurrency, takes Wall Street on a wild ride. Bitcoin is up 66% this year and 452% over the past 12 months.
“We saw demand from millennials,” said Chang. “We also saw demand from institutional investors for the first time.”
In a research note last week, Chang and colleague Amy Ho wrote that investors could consider owning up to 1% bitcoin in a multi-asset portfolio.
“We’re also concerned about reviews”
However, she does find short-term issues related to the popularity of cryptocurrencies.
“We’re also concerned about the reviews here,” said Chang. “We have seen inflows of just $ 11 billion since last September, which is a huge number for Bitcoin, has increased market cap by $ 700 billion.”
She believes the demand for alternatives to traditional investments will persist, but her forecast comes with a caveat.
“Right now, during a major stock decline, we have not seen that it was an effective hedge,” said Chang.
Bitcoin failed to generate profits on Thursday as major stock indices fell. The cryptocurrency was also hit, falling more than 5%.
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