Leading financial institution JPMorgan has cast doubt on the potential inclusion of cryptocurrencies such as XRP, Solana (SOL), and Cardano (ADA) into a proposed U.S. strategic crypto reserve. The probability of such a reserve receiving the green light is less than 50%, with the chances of incorporating these specific tokens even lower, according to the bank.
“The likelihood of U.S. authorities approving a strategic crypto reserve is under 50% in our estimation, assuming it would require congressional approval,” said Nikolaos Panigirtzoglou, JPMorgan’s managing director of global market strategy. He also added, “Should this reserve come to fruition, it would be challenging to incorporate smaller tokens like XRP, SOL, and ADA due to increased risk and volatility concerns.”
In a report released on Wednesday, JPMorgan highlighted the initial positive market response following the proposal to include these cryptocurrencies in the potential reserve, alongside Bitcoin (BTC) and Ether (ETH). However, this enthusiasm was quickly tempered by market doubts related to congressional approval and the feasibility of including smaller tokens.
State-level attempts to establish bitcoin reserves in Montana, North Dakota, South Dakota, and Wyoming have already been met with failure, due to concerns around volatility and risk. Internationally, central banks such as the Swiss National Bank and Poland’s central bank have dismissed bitcoin as a reserve asset, while Singapore has deemed cryptocurrencies as unsuitable for long-term investment strategies.
“Moreover, the European Central Bank’s reservations about bitcoin reserves underscore the wider skepticism among policymakers regarding the adoption of cryptocurrencies as reserve assets,” the report noted.
JPMorgan analysts, led by Panigirtzoglou, argue that the uncertainties surrounding the U.S. strategic crypto reserve, record crypto ETF outflows, and other market factors, are contributing to a short-term bearish outlook in the crypto markets. Bitcoin experienced a near 20% drop in February, marked by $3.5 billion in outflows from spot bitcoin ETFs — the highest monthly outflow since their inception.
Furthermore, Strategy’s (formerly MicroStrategy) latest $2 billion convertible debt issuance has raised alarm bells about potential demand saturation, with increasingly investor-friendly terms indicating a decrease in enthusiasm. As a result, JPMorgan anticipates the cryptocurrency markets remaining under pressure in the immediate future.
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