The largest US bank, JP Morgan, presented an 86-page report entitled: “Outlook Analysis: Digitaltransformation and development of fintech: blockchain, bitcoin and digital finance in 2021 ".
Bitcoin and Gold
Credit institution experts come to the conclusion that the COVID-19 pandemic has begun to influence global finance in such a way that there is a demand for fintech innovations. Speaking about Bitcoin, it is declaredconfidence that this phenomenon will not disappearjust like that, and in some respects on a global financial level, Bitcoin is beginning to compete with both gold and the world's reserve currencies.
JP Morgan analysts "theoretically predict" thatthe price of bitcoin may rise to 146 thousand dollarsif the capitalization of cryptocurrency # 1 is correlated with the overall valuation of gold bars in the world, which is determined through the circulation of exchange-traded funds (ETFs) for this metal.
JP Morgan said that the price of Bitcoin has increasedpush from Tesla's reported $1.5 billion investment in the digital asset. However, the bank considered the current price level of the digital asset “to be very higher than our, one of the most recent, estimates of its value, built on the basis of the costs of mining this cryptocurrency, as well as taking into account the risk of comparing investments in this asset with investing in gold.”
Jeroen Blockland, Head of Investment CompanyRobeco positively assessed the graph in the JP Morgan report. This graph indicates that Bitcoin has proved to be, despite its only 12-year history, the fastest growing investment asset in the world's financial history over the past 50 years.
#bitcoin in perspective. Nice chart from J.P. Morgan pic.twitter.com/zQnnxrsqJE
- jeroen blokland (@jsblokland) January 22, 2021
Speaking of the reasons for this dynamic, at JP Morgannote: "The competition between bitcoin and gold will likely continue as millennials are becoming an increasingly visible part of the investor world, and given that they prefer to invest more in digital gold than in classic gold."
According to JP Morgan estimates currently in the worldthere are 58 fintech companies with a capitalization of more than one billion dollars that will compete with banks for "dominance in the digital financial world."
Cryptocurrency market risks
Bitcoin's March fall in 2020, albeitshort-term and what happened simultaneously with the collapse of indices on Wall Street, apparently left a strong impression on the bank's experts (recall that then, in the middle of the month, cryptocurrency # 1 was worth less than 4 thousand dollars). As a result, they conclude that "cryptoassets continue to be the weakest hedging option in the market against strong declines in securities."
They believe that the bigger they getinvestment in Bitcoin is widespread, the more there will be a correlation between its price and “cyclical assets,” that is, for example, with the dynamics of the key index of the American stock exchange (S&P 500).
Attention is drawn to the risk for bitcoin, whichlies in "the possibility of a sharp drop in confidence in the stablecoin Tether (USDT), which is likely to cause a strong liquidity shock and create risks of access to the largest pools of demand and liquidity." Let us remind you that discussions are continuing in the expert environment, which center around the topic of USDT reservation by US dollars.
Some believe that the lack of an auditedfinancial information about the current reservation (which it is), as well as the possible only partial coverage of the entire issued USDT mass by real US dollars, may lead to the risks that JP Morgan has also paid attention to. US regulators are also currently trying to sort out the financial health of the company behind the USDT issue. The results of New York State's two-year lawsuit against Tether are presented here.
Government digital currencies (CBDC)
JP Morgan expects that in the next three yearsthe central banks of the countries of the world will increasingly clarify the rules for regulating cryptocurrencies. At the same time, approximately every fifth inhabitant of the Earth will have access to various kinds of government stablecoins (CBDC) within the specified period.
If we talk about the prospects for CBDC and alreadyexisting digital assets, JP Morgan decided to take a largely wait and see attitude. They do not intend to write off cryptocurrencies, especially emphasizing the innovative spirit of this phenomenon. On the other hand, they do not undertake to clearly predict how the market interaction between CBDC and, for example, Bitcoin will be built. At the same time, the bank emphasizes that CBDCs for their effectiveness will have to function on the blockchain.
The fate of the US dollar
Found a place in the JP Morgan report and geopolitics:
“The possibility of the emergence of a payment infrastructure,which will not focus on the US dollar, makes us talk about a geopolitical factor, which, if it manifests itself, will need to be dealt with ”.
As a reminder, various analysts paid attention tothat the development of digital infrastructure, including those focused on the use of blockchain and the use of cryptocurrencies, can potentially have a significant impact on the current state of global finance. As a result, the US dollar may lose the leading characteristics it has as the world's leading reserve currency and as the most common means of payment in international trade contracts.
CBDC: Assessing the Experience of China and Japan
Bank analysts believe that the launch of CBDCby central banks could create the possibility of a major change in the financial system, as a result of which commercial banks could lose the importance they have today. JP Morgan recommends that regulators launch CBDC in such a way that the mentioned probability is minimized.
Separately, the bank’s report covers the topic of DC/EP, thenThere is a digital yuan (CBDC), which is already being tested on a large scale by the People's Bank of China. Since this CBDC is tied to the currency of China, JP Morgan experts believe that DC/EP will not create serious risks for the dominance of the US dollar in world finance, since the regular yuan has not yet become the world’s leading reserve currency, and its “digitalization” will reflect just the established order of things:
"Beijing will most likely not be able to reduce its dependence on the US dollar as well as on SWIFT."
Read our special material on this topic: «Can the Chinese yuan displace the dollar as the world reserve currency?«
An interesting analysis is provided regardingsituation with the CBDC concept in Japan. There, as expected, in April of this year will begin testing the private digital yen. The organizer of the project, The Digital Currency Forum, brings together more than 30 large corporations and organizations in Japan who will take part in such testing, conducted under the supervision of local regulators.
As JP Morgan points out:"Commercial banks are expected to be one of the key elements of the digital yen circulation infrastructure." At the same time, it will be important for The Digital Currency Forum to work out a marketing strategy so that the digital yen is interesting for consumers to use financial services.
The topic of interaction between banks and innovation has becomeone of the key ones in the report. JP Morgan believes that new technologies, for example, will help many US regional banks grow into major giants of global importance.
In China, experts saw a strengthening of the roleexisting banks through the introduction of new technologies, in particular, mobile banking. It is expected that the digitalization of the insurance and lending sectors will become a global trend in the coming years. In the Middle East region, JP Morgan analysts have found rapid growth in the turnover of neobanks (organizations that have digital banking licenses and exist only online), especially in the UAE.
JP Morgan about Russia
JP Morgan sees great development prospectsdigital finance in Russia, whose economy they predict U-growth after weakening the impact of the COVID-19 pandemic. At the same time, they noted that those banks in Russia that had previously relied on online services were able to successfully pass the peak of the pandemic and are mainly increasing their turnover.
Going forward, JP Morgan expects furtherthe growth of downloads and the use of mobile applications of banks and suggest that digitalization of banking services, having already gained popularity among customers, will be further demanded by consumers of such services.
Focus on blockchain
The JP Morgan report paid much attention to thedistributed ledger technologies. So, in 2020, the bank launched a new business unit called "Onyx by JP Morgan", and the results of its activities were said as follows: "We managed to create an impressive portfolio of new products based on new technology in accordance with the mission of" Onyx by JP Morgan "- to change the image of how a business can be built, how it can be managed differently, given its transformation due to the development of new infrastructure and services that become possible thanks to distributed ledger technology. "
In particular, we are talking about the emergence of a systemwhich allows you to carry out REPO transactions on the blockchain. Liink by JP Morgan was also created - "the world's largest blockchain system for institutional players, which is gaining more members and increasing the range of services." In addition, JP Morgan mentioned the JPM Coin project, which is a "blockchain-based payment system and ledger of accounts."
The bank stressed that “they plan to continueto increase investments in blockchain technologies, since many such investments have led to the fact that they have grown into developed areas of activity, and their scaling has become global. "
JP Morgan with its approach to blockchainfits into the general trend. It is noteworthy that a little earlier, the global IT giant, IBM Corporation, denied information that appeared in some media about the fate of its blockchain division, emphasizing that there are no plans for fundamental changes in the direction of reducing the activity of this business unit.
JP Morgan and Bitcoin: the "ball" on the side of bank customers
What will JP Morgan itself do in connection withdevelopment of digital assets, especially in terms of Bitcoin? Jamie Dimon, the head of JP Morgan, said during a conference in November 2020 that he still had no interest in Bitcoin.
However, in mid-February of this year, DanielPinto, the bank's vice president of operations, stated that while he doesn't currently see interest from the institution's clients in trading in Bitcoin, "over time, cryptocurrencies, like any asset class, could evolve to in order to be involved by various investment fund managers and ordinary investors, then we, of course, will need to be involved in working with such instruments.”
Where is it more profitable to buy bitcoin? TOP-5 crypto-exchanges
For a safe and convenient purchase of cryptocurrencies with a minimum commission, we have prepared a rating of the most reliable and popular cryptocurrency exchanges that support deposits and withdrawals of funds inrubles, hryvnias, dollars and euros.
The reliability of the site is primarily determinedtrading volume and number of users. By all key metrics, the largest cryptocurrency exchange in the world is Binance. Binance is also the most popular crypto exchange in Russia and the CIS, since it has the largest cash turnover and supports transfers in rubles from bank cardsVisa / MasterCardand payment systemsQIWI, Advcash, Payeer.
Especially for beginners, we have prepared a detailed guide: How to buy bitcoin on a crypto exchange for rubles?
Rating of cryptocurrency exchanges:
| # | Exchange: | Website: | Rating: |
|---|---|---|---|
| 1 | Binance (Editor's Choice) | https://binance.com | 9.7 |
| 2 | Bybit | https://bybit.com | 7.5 |
| 3 | OKEx | https://okex.com | 7.1 |
| 4 | Exmo | https://exmo.me | 6.9 |
| 5 | Huobi | https://huobi.com | 6.5 |
The criteria by which the rating is set in our rating of crypto-exchanges:
- Work reliability— stability of access to all functions of the platform, including uninterrupted trading, deposits and withdrawals of funds, as well as the duration of the market and daily trading volume.
- Commissions– the amount of commission for trading operations within the platform and withdrawal of assets.
- Feedback and support– we analyze user reviews and the quality of technical support.
- Convenience of the interface– we evaluate the functionality and intuitiveness of the interface, possible errors and failures when working with the exchange.
- Platform Features– availability of additional features — futures, options, staking, etc.
- final grade– the average number of points for all indicators determines the place in the ranking.
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