Cryptocurrencies could play role in diversifying investment portfolios, JPMorgan analyst say

US bank’s research unit publishes extensive report on digital currencies and blockchain technology

Cryptocurrencies could play role in diversifying investment portfolios, JPMorgan analyst say

Cryptocurrencies can one day become another option for investors to diversify their portfolios, according to a new report, written by JPMorgan Chase analysts

According to industry website Coindesk, which has obtained a copy of the report, the 71-page study, titled "Decrypting Cryptocurrencies: Technology, Applications and Challenges", explores a number of topics related to cryptocurrencies and blockchain technology, including possible implications for investors, financial companies and central banks.

"If past returns, volatilities and correlations persist, [cryptocurrencies] could potentially have a role in diversifying one's global bond and equity portfolio. But in our view, that is a big if given the astronomic returns and volatilities of the past few years," analysts at JPMorgan’s Global Research unit wrote, as quoted by Coindesk.

The authors also suggest that if digital currencies manage to “survive” the next few years and remain part of the global market, “then they will likely have exited their current speculative phase and would then have more normal returns, volatilities (both much lower) and correlations (more like that of other zero-return assets such as gold and JPY)". They added that cryptocurrencies were “unlikely to disappear completely”.

The report also touched upon the potential uses of blockchain technology, particularly by private companies which would maintain their own “permissioned” distributed ledgers.

JPMorgan’s chief executive officer, Jamie Dimon has been one of the biggest critics of cryptocurrencies. He criticised the nascent asset class on several occasions last year and even called Bitcoin a fraud. Earlier this year Damon admitted that he regretted having made that comment, but insisted that he was still not interested in the cryptocurrency.

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