by Rushali 
On Thursday, JP Morgan has published a memo in which their strategists have raised questions against bitcoin’s utility as an investment hedge.
Federico Manicardi and John Normand, the strategists of JP Morgan had said the bitcoins are the, “least reliable hedge during periods of acute market stress”.
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Their main question is that will BTC act as a reliable diversification investment when economic uncertainty arises.
“Mainstreaming is reducing diversification benefits and leading to underperformance during crises,” the memo said.
The memo also said, Bitcoin’s recently heightened correlation with traditional markets, moreover, could “erode diversification value over time” if the strong positive correlation continues.
According to coin metrics data, have a weak relation but if we compare it by a year ago then they still have a better relationship. Bitcoin and the S&P 500 have a 180-day correlation of 0.23.
Bitcoin’s close relationship with price movements in legacy markets and the “mainstreaming” of cryptocurrency investing generally is “potentially converting them from insurance to leverage,” the strategists wrote.
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Bitcoins price have touched $42000in the first week of January and now it is around $32000.
What could change this pattern, however, is “a more unique macro shock related to much higher U.S. inflation or a breakdown of the payments system,” the analysts said.
JP Morgan had similarly said in October 2020 that BTC is not safe heaven it is a risky one.
