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Maltese Falcoin Crypto Report: 9 Things to Know About JPMorgan’s Bearish Bitcoin Report

Cryptocurrency is the biggest investment opportunity of the new decade, and it’s not even close. Retail investors, billionaires and institutions alike have been able to generate millions of dollars investing in digital currency. But, as…

Cryptocurrency is the biggest investment opportunity of the new decade, and it’s not even close. Retail investors, billionaires and institutions alike have been able to generate millions of dollars investing in digital currency. But, as is the case with any new and misunderstood tech trend, there are plenty of naysayers. This month, there’s a surprising new bearish crypto report coming out of the JPMorgan Chase (NYSE:JPM) camp. The “Maltese Falcoin” crypto report pans the crypto industry, and it has many investors talking.

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The report is shocking the investing world today; the idea that a chief at an investment bank of JPMorgan’s magnitude is rejecting this provenly lucrative class of assets is stunning. But, it’s real; the 30-page report goes over one prominent analyst’s rejection of crypto, specifically Bitcoin (BTC-USD).

So, what does this report entail? Here’s what you need to know.

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Maltese Falcoin Crypto Report Sees JPMorgan Taking Pessimistic Stance on Bitcoin

  • The lengthy new report out of JPMorgan is the “Maltese Falcoin” crypto report. The report is authored by the investment bank’s Asset and Management Chief, Michael Cembalest.
  • The name of the report comes from the 1941 film The Maltese Falcon. In the movie, characters seek ownership over a rare artifact. Ultimately, the artifact turns out to be fake and worthless in the end.
  • This name establishes Cembalest’s bearish take on crypto: while investors continue to invest in Bitcoin, the use case for it as a store of value isn’t actually there. He says that not enough people actually use the currency for it to be a reliable store of value. Cembalest illustrates this point by evidencing that crypto is far more volatile than the gold market — one of the most popular store-of-value plays.
  • Cembalest’s criticisms don’t end with volatility; rather, he blames pump-and-dump schemes, exchange hacks and front running by crypto miners as drivers of the volatility and bearish signals in their own rights.
  • Still though, Cembalest doesn’t just blast cryptocurrency the whole way through the report. He concedes that the financial crisis of 2008 has created an obvious “confidence void” between citizens and central banks and treasuries. As an alternative investment, crypto has greatly succeeded in creating wealth. Rather than arguing this point, Cembalest’s argument rests in the idea that the value of cryptocurrency is unfounded and driven only through speculation.
  • The report doesn’t only press against crypto’s value but also against existing use cases. Cembalest argues against crypto as a vehicle for international money transfers. Users need bank accounts in the destination countries of their assets; thus, he argues the use case is not better than traditional remittances.
  • The analyst also takes on DeFi, dismissing it as “over-collateralized crypto loans to other holders of crypto.” He says these investors simply use the loans to buy more crypto or avoid capital gains taxes.
  • In regards to non-fungible tokens (NFTs), Cembalest takes a surprisingly bullish stance. He defends the market by saying tastes are up to the individual; an interest in NFT art doesn’t differ from an interest in works of artists who create physical pieces.
  • All in all, the report is quite shocking to a market that’s still fast growing, even with the massive market correction that pared $1 trillion in value from the asset class. Cembalest’s report stands in direct opposition to many investment banks right now; both Bank of America (NYSE:BAC) and Goldman Sachs (NYSE:GS) are bullish on cryptocurrency, per their most recent reports on the matter.

On the date of publication, Brenden Rearick did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

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