Investors could fill 1% of their portfolios with bitcoin as it becomes more correlated with stocks, JPMorgan says
Summary List Placement
Investors can fill up to 1% of their portfolios with bitcoin, JPMorgan said in a recent client note.
The token has become more correlated with stocks as it's entered the mainstream, so it's not a great hedge against market shocks, the firm added.
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The correlation between bitcoin and stocks has "risen meaningfully" over the past year as bitcoin becomes more mainstream, says JPMorgan. And while that makes it a poor hedge against market drawdowns, investors with a multi-asset portfolio could consider allocating as much as 1% to cryptocurrencies, according to the firm.
Although crypto enthusiasts have touted bitcoin and other digital currencies as hedges against crashes in equities, JPMorgan data has found that crypto assets have been the worst hedges during past stock market drawdowns.
"Bitcoin does not have any kind of value as a hedging vehicle in the current environment given the same investors drawn to bitcoin...
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