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

article-image

Blockworks exclusive art by axel rangel

share

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.


Don’t miss the next big story – join our free daily newsletter.

Tags

Upcoming Events

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

MON - WED, MARCH 18 - 20, 2024

Crypto’s premier institutional conference returns to London in March 2024. The DAS: London Experience:  Attend expert-led panel discussions and fireside chats  Hear the latest developments regarding the crypto and digital asset regulatory environment directly from policymakers and experts   Grow your network […]

recent research

Pyth Cover.jpg

Research

Pyth is a low latency pull-based oracle. In a future that looks increasingly high frequency, with various alt L1s and L2s that have significantly shorter block times than Ethereum, and an explosion of “high-frequency” protocols such as oracle or CLOB perp DEXs, Pyth’s low latency oracle product looks much better positioned to capture a significant amount of market share in comparison to competitors.

article-image

Binance settlement “an important part of clearing the way for the next bull market cycle,” crypto hedge fund executive says

article-image

Hester Peirce reiterated Tuesday that court cases are not the only path to regulatory clarity for crypto, but her colleagues do not always agree

article-image

The indictment followed leaks Monday that a Binance settlement deal was forthcoming

article-image

The Binance executive is also reportedly set to make an appearance in a Seattle courtroom Tuesday

article-image

Monday developments reaffirmed the US as unfriendly to crypto while also offering a potential bullish outlook for segment firms, industry watchers say

article-image

It’s unclear what “actions” the CFTC, DOJ and Treasury will announce Tuesday afternoon