When it comes to the relationship between Bitcoin and banks, it becomes interesting. This is not surprising, considering that BTC was created by Satoshi Nakamoto in response to the 2008/2009 banking crisis and for the first time allows payments without an intermediary such as a bank. Considering that BTC has the potential to destroy the business model of banks in theory, Bitcoin could be seen as a kind of competitor for many banks, which in their view should be kept small.

But this resentment seems to have changed in recent weeks and months, especially at the major American bank JP Morgan. Only recently, it accepted the two crypto exchanges Coinbase and Gemini as customers. Now analysts of the banking house are going one better and confess Bitcoin in a new report called „Cryptocurrencies undergo their first stress test: Digital gold, pyrite or something in between?“ strength and resistance. In one aspect, BTC is said to be even better than other assets.

Bitcoin passed stress test in March

We all remember back: it was Thursday 12th March and Bitcoin, along with other assets, plunged into the depths of the panic in the global markets. While all asset classes were affected, Bitcoin was hit the hardest with a drop of almost 50% within 24 hours.

According to analysts Joshua Younger and Nikolaos Panigirtzoglou of the largest American bank JP Morgan, precisely this was a defining moment in BTC history. The turbulence in March of this year was, according to the two, a stress test for digital gold. Now, looking back, it can be said that the young asset passed this test with „mainly positive“ results.

But therefore not enough. The two analysts even admit in their report that Bitcoin has come to stay, saying that the positive stress test shows „longevity as an asset class“. Nevertheless, BTC as an asset is still used more for speculation, as a transaction medium or as a store of value.

Further words of praise for BTC

JPM analysts also praise Bitcoin for the fact that, according to their analysis, BTC fell only briefly below its intrinsic value (mining costs per BTC) despite the massive slide in March. This is shown in the following chart, where the chart is above the value of 1 most of the time.

Bitcoin Produktionskosten

According to JP Morgan, Bitcoin’s market structure is even more resilient than that of other assets such as currencies, shares, government bonds and gold. To measure this, the analysts looked at liquidity, or more precisely at the bid-offer spread. When the order book empties, individual transactions can cause larger price jumps than usual. Although Bitcoin suffered one of the most severe liquidity collapses at the height of the crisis, BTC recovered from it much faster than other asset classes.