Wall Street hasn’t been a big booster of Bitcoin so far, but the ice seems to be melting. JPMorgan has—very cautiously—recommended investors consider adding the cryptocurrency to their portfolio.
“In a multi-asset portfolio, investors can likely add up to 1% of their allocation to cryptocurrencies in order to achieve any efficiency gain in the overall risk-adjusted returns of the portfolio,” the investment firm said in a note Wednesday.
Bitcoin’s volatility has made many investors wary over the past few months. Year to date, it has jumped from $29,333 to $49,902 as of 12:40 p.m. ET on Thursday. At its peak, it had reached as high as $57,000. Last week, its market cap topped $1 trillion.
Elon Musk made a splash recently when it was revealed that Tesla had purchased $1.5 billion in Bitcoin. Fortune’s Shawn Tully calculates that the company has made more money on its Bitcoin stash than its actual business of selling cars and batteries this year.
Because the digital currency isn’t backed by anything substantial, some investors have doubted its staying power. Though boosters in the past have touted it as a hedge against inflation, that doesn’t seem to be the case, given how it has traded recently. However, said JPMorgan, it can act as a diversification tool in a portfolio, if the investor has just a small interest in Bitcoin.
JPMorgan isn’t the first investment bank to show an interest in Bitcoin. BNY Mellon announced plans earlier this month to form a new team that’s developing a custody and administration platform for traditional and digital assets. An investment unit of Morgan Stanley is also in the process of considering whether to bet on Bitcoin.
