Cryptocurrency markets are likely to remain under pressure in the short term owing to a lack of positive catalysts and skepticism about whether Congress will approve a U.S. strategic crypto reserve, JPMorgan (JPM) said in a research report Wednesday.
“Not only is there skepticism about congressional approval for such a strategic crypto reserve, but also the feasibility of including smaller tokens outside bitcoin (BTC) and ether (ETH) given their high risk and volatility,” analysts led by Nikolaos Panigirtzoglou wrote.
On Thursday, President Donald Trump directed his administration to establish a Bitcoin Strategic Reserve to hold the assets that have been seized by the government. He also called for a stockpile of other crypto assets, without naming those that should be included despite mentioning XRP, solana (SOL) and cardano (ADA) earlier in the week.
JPMorgan noted that talks about bitcoin inclusion in strategic reserves at the state level have also failed to garner support.
States including Montana, North Dakota, South Dakota and Wyoming have all rejected such proposals due to “risk and volatility” concerns, the report said.
The world’s central banks are equally cautions about including the world’s largest cryptocurrency in their reserves.
The Swiss National Bank (SNB) and the National Bank of Poland have rejected adding bitcoin to their reserves, instead opting for more stable assets such as gold, JPMorgan noted.
Singapore also rejected the idea. “Cryptocurrencies do not align with [the bank’s] long-term investment strategies due to their speculative nature,” it said.
The European Central Bank (ECB) has criticized the idea of bitcoin as a reserve asset, and this is indicative of the wider skepticism amongst policy makers about using cryptos as reserve assets, the report added.
Read more: Trump’s Strategic Crypto Reserve is a Positive, Market Has Got it Wrong, Bitwise Says
