JPMorgan has reportedly quietly told some of its clients to consider Bitcoin as a portfolio diversifier, noting the asset could be beneficial if “sized correctly.”

According to a report by Wolfie Zhao for The Block, JPMorgan Private Bank has distributed an educational deck of slides to clients of its wealth management service in order to help them better understand the risks and benefits of Btcoin and cryptoassets. The deck, which The Block was able to obtain a copy of, apparently covers the basics of Bitcoin in addition to the implications of adding the cryptoasset to an investment portfolio. 

Despite covering cryptoassets, the deck claims to be for “informational purposes only” and says  “J.P. Morgan Securities LLC does not endorse, advise on, transmit, sell or transact in any type of virtual currency.” 

A slide titled “How others are valuing crypto?” detailed three common metrics used by market analysts, while suggesting “significant upside [of bitcoin] is possible.” 

The report also claims to use Metcalfe’s law — a value of a network proportional to the square number of it users — to determine Bitcoin’s per-coin valuation at $21,667. 

The deck’s authors argued against considering Bitcoin as a safe haven asset on par with gold, at least for now:

Bitcoin is not gold, nor do we think of it as such. When it comes to portfolio construction, it has diversifying properties like gold, but its volatility characteristics and correlation profile refute the comparison to the traditional safe haven asset.

The deck concludes Bitcoin can diversify an investment portfolio, but should not be considered as a protection asset:

It’s difficult to conclude that outflows from gold are directly linked to inflows into Bitcoin. That said, Bitcoin doesn’t consistently trade like a protection asset or a substitute for gold. If anything in the near term, Bitcoin is more similar to a diversifying risky asset rather than protection akin to Treasuries and gold.

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The views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment, or other advice.