Digital assets: Bear market would be the hardest test for Bitcoin

Bitcoin has not received a stronger confirmation for die -hard fans than Jamie Dimon, who calls it "worthless". JPMorgan, which he leads, is exactly the kind of dominant, regulated institutions that are supposed to disrupt cryptocurrencies.

"He keeps commenting cryptos," says Oleg Giberstein, a London crypto entrepreneur, "but the market proves that it is wrong". Bitcoin jumped to around $ 60,000 last week, close to historical highs, in anticipation of the long-awaited laying of stock markets traded.

The total value of the cryptos monitored by the Coingecko website rose to $ 2.5 trillion, such as five times the JPMorgan market value. Despite Dimon's broad sides, his bank gave asset management customers access to cryptocurrency funds this summer.

lex will examine digital assets in a daily note this week because they enter the financial mainstream. However, Giberstein's comment is only half right. The popularity of cryptos causes some regulated institutions to offer trade services. But a real market test will only come with a longer downturn.

The position of this column to Bitcoin is that its benefit on secrecy (some of them illegal), dissent (some of them justified) and speculation (it is always with us) is limited. In the latter robe, Bitcoin is a good barometer of exuberance, precisely because it is an awkward transaction medium.

The price of this supposedly uncorrelated asset last year, about halved when the S&P 500 fell by a third. It quickly recovered when rescue packages and vaccines flowed. It is environmentally polluted and fabulous unstable: It is about five times more volatile than the S&P 500 index by a key figure.

Our guess is that Bitcoin would stick to the linoleum during a persistent Baisse. A strong withdrawal of the shares is possible if governments and central banks miss the change of free -handed incentives to interest increases and tax increases.

It is controversial how well Bitcoin, a legacy asset without intrinsic return, would recover. Other more manageable cryptos appear. But even if it became a historical footnote, this flagship crypto would have shown that digital assets could be widespread. Central banks that rise to defend Fiat money therefore experiment with electronic versions that use the same blockchain technology.

Ultimately, the currency authorities Dimon and its successors will probably impose regulated digital assets. This would reduce the transaction costs and the margins they bring in the banks. That would be far from the decentralized disruption bitcoin evangelists who imagine this. But its effects would still be far -reaching.

The Lex team is interested in hearing more from the readers. Please tell us in the comment area below what you think of the rising cryptos and wider assets.