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- JPMorgan Strategist Expresses Concerns About the Crypto Market.
- Michael Cembalest, JPMorgan’s chairman of investment strategy, is skeptical of bitcoin and other cryptocurrencies. He is not convinced that bitcoin is a viable business medium of exchange.
- Cembalest indicated that he believes bitcoin and other cryptocurrencies lack a reliable valuation mechanism.
Despite the fall of bitcoin- it seems like the market is finally recovering. Bitcoin BTCUSD, +2.43 percent fell below $34,000 in January, raising fears of crypto winter, but has since climbed to more than $42,000 this morning. Shiba Inu, a meme coin, is up almost 25% to $0.000027.
Cembalest calls out Bitcoin: no valuation mechanism
Cembalest indicated that he believes bitcoin and other cryptocurrencies lack a reliable valuation mechanism.
“While some hydrogen uses to make sense, energy investors are pricing in far more than that, and I feel the same way about crypto valuations.” Some bitcoin applications will continue to exist, but valuations are based on broader and faster usage,” Cembalest remarked.
He is not convinced that bitcoin is a viable business medium of exchange.
“Bitcoin is not now a medium of trade save in a few specific circumstances,” Cembalest explained.”The declining number of bitcoin transactions per day, as well as the increases in execution costs, have nothing to do with any operating fiat currency.”
He stated that the most likely use cases for bitcoin are remittances private blockchains with little to no financial impact.
“The fundamental question is the success of permissionless public blockchains that could provide money for token holders,” he said, adding that it is the most coherent argument he has seen.
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“Bitcoin fails the transaction method criteria”
The first question is whether bitcoin is a safe shelter for money. A digital store of value, according to Cembalest, may exist.
Bitcoin, on the other hand, fails to meet two of its criteria: volatility settling into a range consistent with store of value investing and value increasing or being stable when systemic risks and inflation grow.
Pump-and-dump schemes are another source of volatility for cryptocurrencies, according to him. “Such scams and other actions that would be criminal in traditional stock markets are not forbidden by definition on decentralized blockchains.”
Second, the strategist linked bitcoin to hydrogen projects and green energy, essentially wondering what the ultimate magnitude of bitcoin will be.
Nancy J. Allen is a crypto enthusiast, with a major in macroeconomics and minor in business statistics. She believes that cryptocurrencies inspire people to be their own banks, and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning. She frequently researches, and posts content on the top altcoins, their theoretical working principles and technical price predictions.
