“Digital Assets Instead of Expensive Real Estate” – JPMorgan

JPMorgan analysts believe that digital assets are preferred over real estate as alternative asset class. In JPMorgan’s alternative investments outlook and strategy note, Nikolaos Panigirtzoglou and team shed light on the outlook for crypto following the Terra collapse. In the note to clients issued on Wednesday, the strategists said:

“While public markets already price in significant recession risks, and digital assets have repriced significantly following the collapse of terra USD [UST], some alternative assets such as private equity, private debt and real estate appear to have lagged somewhat. We thus replace real estate with digital assets as our preferred alternative asset class.”

The team also said that the Terra collapse has diminished sector sentiment, thereby offering a “good entry point” for longer-term investors. Venture capital funding, which is still a strong force they say, is key to avoiding a “long winter” similar to 2018-2019.

While Bitcoin and other cryptocurrencies are trading far below their all-time highs, and this might be experienced as “capitulation”, the JPMorgan team peg the value of the flagship cryptocurrency at $38,000 based on the Bitcoin-gold volatility ratio, which is almost 30% above the current price of $29,717.

Panigirtzoglou and colleagues also explained their clients that stablecoins, and the total value locked in decentralized finance (DeFi) projects excluding Terra has been “relatively resilient” amidst recent market dynamics.