Crypto Is Still Untested And Far Off From Mainstream According To JP Morgan

In 2017 there was a crypto gold rush, and although there was institutional support for crypto, then the momentum has slowed. Most large institutions are being cautious about the adoption of cryptocurrencies such as Ethereum, Litecoin, and Bitcoin.

According to JP Morgan (NYSE: JPM) analysts, the slowing down in cryptocurrencies is down to them being unproven, and they are unlikely to make any significant influence in financial institutions for at least the next five years. 

Crypto still unproven

There is growing scepticism about the blockchain by large institutions on the offering of crypto, and they are waiting to see it gain traction. For instance, New York Based asset management firm Blackrock (NYSE: BLK) last year July hyped Bitcoin as multiple sources indicated that the firm was organizing a large move into crypto. However, because of the uncertainty of crypto, the firm recanted the position in November and stated that they were not ready to offer Bitcoin ETF until a future date when things were legitimate. 

JP Morgan indicated that they are sceptical of the value of cryptocurrencies and this will take years. They stated that crypto assets could only be sensible in a dystopian situation where investors have lost trust and confidence in traditional assets such as the dollar, gold as well as other reserve assets such as treasury notes and Federal notes.

Why is support for cryptocurrency declining?

Bitcoin which is the largest digital coin, last year lost almost three-quarters of its value leading to slowing down of interest from mainstream financial institution and investors contrary to the high ascent they had witnessed in 2017.

Institutional support for cryptocurrency has waned in the last six months. However, individuals have grown their market share compared to large financial firms and banks. The most resistant institutions towards the adoption of cryptocurrency have been pension funds. They cited price volatility as well as the possibility of legislation that might hurt the stability and value of cryptocurrency in the future.

The use of cryptocurrency for payment systems remains challenging because of the complexity of the blockchain with no indication of any major retailers accepting digital coins. However, the future of cryptocurrency is seen to be in markets where individuals and independent business have control over the payment methods. 

For crypto to get adopted by large institutions such as JP Morgan, Blackrock, and other financial institutions, there will be a need for strong legislation and regulations that legitimize and govern cryptocurrency handling.