Strategy's recent bitcoin sales and its formal BTC monetization program may be viewed by investors as a key risk to the crypto market, but that isn't the main risk for bitcoin, according to JPMorgan analysts.
Instead, the bigger threat comes from blockchain adoption that does not benefit public blockchains and their tokens, the analysts led by managing director Nikolaos Panigirtzoglou said in a report. If tokenization, payments, and settlement increasingly happen outside public crypto networks, the broader crypto ecosystem could face a "structural de-rating," see slower activity, lower liquidity, and weaker capital flows, eventually weighing on bitcoin (BTC).
"We do not see Strategy as the main structural threat to bitcoin," the analysts said. "In our view, the more important risk to bitcoin stems from the broader crypto ecosystem and from blockchain adoption within traditional finance continuing to develop in ways that bypass public permissionless networks."
Why blockchain adoption matters more
The analysts said institutional adoption has so far largely favored permissioned blockchains because they offer greater privacy, know-your-customer and anti-money laundering controls, governance, throughput, legal accountability and regulatory certainty.
