Bitcoin Surviving as a Speculative Asset, JPMorgan Says
Bitcoin (BTC) showed that it is a resilient asset, if not a stable or useful currency during March’s global financial meltdown.
In a note obtained by Coindesk, JPMorgan Chase & Co., analysts explained how BTC has changed from a somewhat uncorrelated asset to one whose price more closely traces traditional stocks.
Team of strategists led by Joshua Younger noted, “Though correlations were modest and mostly mean-reverting around zero for much of the past couple of years, in recent months, they have moved sharply higher in some cases and lower in others.”
The said analysts usually cover bonds. And they recently announced that the success of Bitcoin in outperforming traditional assets in March on a volatility-adjusted basis. Also, the report showed that liquidity on major BTC exchange was, unexpectedly, more resilient compared to traditional assets like equities, gold, U.S. Treasury bonds, and foreign exchange.
As a result, their analysis signaled that Bitcoin saw among the most extreme fall in liquidity during the peak of the crisis in March. However, the said disruption eased much quicker than other asset classes. With that, BTC market depth is above its 1-year trailing average. Then, liquidity in more traditional asset classes has yet to recover.
Aside from Bitcoin, stablecoins has values mainly pegged to government currencies. And it has a short mention by the March turbulence saying it is relatively unscathed.
From March 2 to March 23, the S&P 500 declined 29% as investors sought to cash out. And this happened amid the mounting concerns about the coronavirus.
JPMorgan Analysts
Away from Bitcoin, the JPMorgan analysts figured out that cryptocurrencies completely passed their first stress test in this period despite volatile price action.
Over the March panic, crypto valuations did not diverge all that much from their intrinsic values. Then, it showed a little flight to liquidity within the asset class, the analyst noted.
Based on the report, the market structure for crypto during this period was more resilient than that of traditional counterparts. Also, Bitcoin somehow did not quite live up to its reputation in several corners as a port in a storm.
Ripple in Brazil
According to Marjan Delatinne, the Ripple Head of Global Banking, the firm’s On-Demand Liquidity might soon be available in Brazil. The country would be the next area crypto firm Ripple to reach with a cross-border payments corridor. And this could result in its use in other Latin American nations.
During an interview on June 8, Delatinne revealed that the crypto company was developing a cross-border payment system for Brazil.
In addition to that, she explained Ripple’s On-Demand Liquidity (ODL) to moderator Dominic Hobson, saying the firm aims to extend its services to exotic corridors. Delatinne mentioned countries such as the Philippines and Brazil as markets where they don’t necessarily want to keep liquidity. Instead, they want to move funds when they need to.
The three Brazilian companies, Bradesco, Banco Rendimento, and Santander, currently use Ripple’s blockchain-based financial services network RippleNet for payments. But Delatinne said that they could use ODL to the XRP token as a bridge between two fiat currencies for cross-border transactions.
