JPMorgan: Crypto Trumps Real Estate As ‘Preferred Alternative Asset Class’

Bitcoin, which traded below $30,000 Wednesday afternoon, has a fair value of $38,000, according to the bank


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key takeaways

  • Lagged repricing keeps bank more cautious on private equity, private debt and real estate, according to a JPMorgan report
  • There’s little evidence of crypto venture funding drying up after Terra’s collapse, bank analysts say

Digital assets have replaced real estate as JPMorgan’s “preferred alternative asset class,” the bank said in a report Wednesday. 

Public markets have already priced in significant recession risks, and digital assets have re-priced, following the collapse of TerraUSD (UST), according to JPMorgan analysts. 

An algorithmic stablecoin designed to maintain a one-to-one peg to the US dollar, UST traded around 9 cents Wednesday afternoon. 

“A potential lagged repricing keeps us more cautious on private equity, private debt and real estate over the coming quarters,” analysts wrote. “We thus replace real estate with digital assets as our preferred alternative asset class along with hedge funds.”

The analysts’ fair value for bitcoin remained unchanged at roughly $38,000, “implying significant upside for digital assets from here.”

Bitcoin was trading at about $29,700 at 4 p.m. ET on Wednesday, according to Blockworks data.

Though the Terra crash has soured sentiment among investors, JPMorgan analysts said there have been relatively limited spillovers to other stablecoins and DeFi more broadly. 

Venture capital funding in the crypto space will be a key metric to watch, they added. Of the $25 billion of venture capital funding so far in 2022, nearly $4 billion came after Terra’s crash.   

“If VC funding dries up from here as a result of the loss of confidence from the collapse of Terra’s ecosystem, then a return to the long winter of 2018/2019 would look more likely for crypto markets,” analysts wrote. “Thus far there is little evidence of VC funding drying up post Terra’s collapse.”

JPMorgan made a strategic investment in blockchain intelligence company TRM Labs in February. 
Earlier that month, the company unveiled a virtual lounge in blockchain-based world Decentraland. The bank said in a report at the time that the metaverse has a market opportunity of $1 trillion in yearly revenue as creators increasingly turn to Web3 to monetize their work.

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