In the past centuries, people with wealth chose to invest their money in real estate as a store of value. Real estate ensured they had cash flow from rent and leases while their property gained value through appreciation. This has been the culture among people until 2008, during the recession. This lead to property losing value and many people losing their investments. In 2008, the economy was hit hard. Economists have reported a high recession probability in the next few months.
These reports have led to people and organisations finding ways to ensure they can survive through the recession and come out at the end victorious. One of the companies that have been noted to make changes in their operations to survive the recession is the largest investment bank in the world, JP Morgan. JP Morgan is a trendsetter and one of the companies with the most influence in the world. Their actions greatly impact the rest of the world and lead to changes being applied in many other fields. The company has recently announced that they have turned to cryptocurrency as its alternative asset in the market. The company preferred having real estate as its preferred asset before this. This announcement does not shock people following the company’s action as they have invested in cryptocurrency significantly in the last few years.
Choosing crypto as their alternative asset will lead to more companies, clients, and people investing in crypto. This might have a huge impact on the cryptocurrency market. People do not understand why JP Morgan would change their policies from investing in crypto to starting investing in crypto. Some possible reasons for the change include; The first is due to reduced maintenance. Unlike real estate properties that require constant maintenance and extra costs in property taxes, cryptocurrency does not have any extra expenses other than the initial cost and crypto taxes in some countries. This is a huge reason for the shift, considering how much time, energy, and money is required to invest in real estate.
The second is that cryptocurrency is a liquid asset. Unlike real estate, cryptocurrency can be turned into cash in seconds. JP Morgan is an investment company. The alternative investment they make is a way to hold their money in a place that creates value before they find an investment opportunity. An investment opportunity comes around; they need to liquidate their assets to generate the money they need.
Cryptocurrency solves this problem for the company. Selling real estate property requires weeks, months, or years to sell a property. By the time the property is sold, the opportunity might be gone. Cryptocurrency also offers both short-term and long-term rewards to investors. If investors can time the market perfectly, they can earn short-term and long-term rewards from their investment. Cryptocurrency investors can earn from crypto lending and make huge interest in short periods. In long-term crypto investment, the tokens can earn multiple times their worth in a short period compared to the time it takes or real estate to earn any profit.