JPMorgan claims that cryptocurrency has replaced real estate as the “preferred alternative asset class.”
According to JPMorgan, crypto assets have now surpassed real estate in terms of development potential and opportunity. In a recent statement to investors, the bank stated that it was wary about real estate and that bitcoin was the ideal alternative asset.
This change comes as rising interest rates put upward pressure on commercial real estate cap rates, and as sellers and purchasers modify their expectations in the investment markets, according to Wealth Management. Other factors influencing CRE prices include rising building costs and a slew of basic problems about how these assets are evaluated.
According to a new Fortune report, JPMorgan strategists led by Nikolaos Panigirtzoglou believe the dominant digital currency Bitcoin (BTC) has opportunity to rise. The survey also predicted that rising mortgage interest rates would cause a fall in the real estate industry.
The analysts’ goal price for Bitcoin is around $38,000, representing a more than 25% gain over the current market value of $30,300.
Bitcoin’s recent plunge has left it much below its true value, giving it “considerable upside” currently. According to JPMorgan, this is the ideal time to invest in cryptocurrency. Bitcoin fell below $26,000 for the first time since December 2020 earlier this month. It appears to have followed the stock market down, fuelled by inflation worries.
Despite the fact that JPMorgan analysts recently downgraded alternative asset classes from “overweight” to “underweight” due to continued macroeconomic problems, bitcoin assets are now their preferred alternative asset class over real estate.
According to the strategists, the most recent crypto space collapse, which saw the digital assets sector lose more than $1 trillion in market capitalization, has had little to no influence on the rate at which venture capital companies are spending money in virtual assets.
Andreessen Horowitz, a venture capital firm, has announced the creation of two new cryptocurrency funds, one with a massive $6.5 billion for digital assets in general and another with $600 million for metaverse gaming.
JPMorgan CEO Jamie Dimon, who earlier branded Bitcoin “useless,” claimed in April that blockchain and decentralised finance (DeFi) technologies had genuine use cases.