JPMorgan strategists recommend a portfolio allocation of 1% Bitcoin

Recently, an analyst from a well-known investment bank suggested in a report that investors might consider allocating 1% of Bitcoin in a diversified asset portfolio to enhance the overall efficiency of the portfolio. The analyst believes that Bitcoin can serve as a hedging tool with a lower correlation to the broader market.

However, when we compare the S&P 500 index with Bitcoin, this conclusion is not undisputed. According to statistics from a certain data platform, the current correlation coefficient between these two markets is 0.134, which is considered low. However, it is worth noting that during the significant market decline in March 2020, the correlation between the two briefly climbed to 0.54. This phenomenon of increased correlation under extreme market conditions suggests that there may be a certain degree of connection between these two markets.

This week, global financial markets have generally experienced significant setbacks. The S&P 500 Index fell by 2.45%, while Bitcoin plummeted by 15%. Nevertheless, many large enterprises are still actively increasing their holdings of Bitcoin. Reports indicate that a well-known cryptocurrency exchange has been holding Bitcoin on its balance sheet since 2012. Earlier this month, a well-known electric vehicle manufacturer also announced the purchase of $1.5 billion worth of Bitcoin.

It is worth mentioning that this investment bank has recently begun to focus on digital assets as a key area of interest and views Bitcoin as an investment tool similar to gold. Members of the bank's global markets team have even stated that as investors turn to alternative investments such as cryptocurrencies, gold ETFs may face the risk of capital outflows.