For those of you who have seen the popular American Drama Series, ‘Mr. Robot’, the concept of a dystopian world, interlinked with a form of digital currency, is not novel.
The Managing director of JP Morgan, Jan Loeys seems to think so too. He recently said that Bitcoin would only be useful if people completely lost their faith from major reserve currencies including gold.
With Bitcoin hitting an all time low recently, it is becoming increasingly apparent that people are losing their faith from over Bitcoin.
However, according to Jan Loeys, if there ever arises a situation where the world descends into chaos, and a dystopia sets in around us, then Bitcoin will be one of the only form of payments that we shall place our faith in.
JP Morgan is however skeptical about Bitcoin flourishing, while other mainstream forms of currency exist in and dominate the market. Until currencies like USD, Yen or Euro find themselves in the dark, and the general public disregards them, it is difficult for Bitcoin to make any real impact.
Loeys wrote a note to clients this week, which said:
“We have long been skeptical of cryptocurrencies’ value in most environments other than a dystopian one characterized by a loss of faith in all major reserve assets.”
The company has its reservations against Bitcoin for the following reasons. Firstly, the bubble like nature of cryptocurrencies and its past risk-return profile makes it difficult to bet on the asset, knowing that its highly volatile.
Secondly, during its periods of slump in 2015 and 2018, Bitcoin was unable to outperform the equity market. JP Morgan states that overvaluation could have played a hand in that.
Considering the development that has happened in the last year in the crypto sector, has not impacted the company’s notion about cryptocurrencies. He noted that its novelty value can “remain high indefinitely.”
Therefore, according to Loeys. when there are extreme cases of financial crises or recession, there is an increased availability of less complicated and more liquid instruments for transactions, investments, and hedging.