The Bitcoin 

BTC

$22,725

 bull market has put the flagship cryptocurrency on par with cyclical assets as opposed to a hedge against market stress, according to analysts at JPMorgan Chase. 

JPMorgan strategists John Normand and Federico Manicardi say anyone betting on Bitcoin as a portfolio diversifier is putting themselves at risk. In a Thursday report obtained by Bloomberg, the strategists called Bitcoin the “least reliable hedge during periods of acute market stress.”

They added:

“The mainstreaming of crypto ownership is raising correlations with cyclical assets, potentially converting them from insurance to leverage.”

Cyclical assets typically refer to stocks that follow the trend in the overall economy, which means their performance depends on the business cycle. These companies produce goods and services that are in demand when the economy is performing well. Consequently, these are some of the first items people forego when the economy weakens.

Cyclical stocks include companies in the restaurant, hospitality, airline, furniture, automobile and other discretionary industries.

While seemingly arguing against Bitcoin’s “digital gold” narrative, the strategists acknowledged that the cryptocurrency may be suitable for investors worried about policy shocks and the systemic devaluation of fiat currencies.

In that vein, their views seem to diverge from fellow JPMorgan strategists led by Nikolaos Panigirtzoglou who believe that Bitcoin is drawing investors away from precious metals. As Cointelegraph reported last month, Panigirtzoglou and colleagues argue that only a small reallocation from gold to Bitcoin would generate “structural” headwinds for the precious commodity.

They said at the time:

“The adoption of bitcoin by institutional investors has only begun, while for gold, its adoption by institutional investors is very advanced. If this medium to longer-term thesis proves right, the price of gold would suffer from a structural headwind over the coming years.”

Against the backdrop of these competing views, Bitcoin remains a highly volatile asset. The cryptocurrency more than doubled in price over a three-week period, going from $20,000 to nearly $42,000, before seeing a pullback in bullish momentum earlier this month. It has since corrected roughly $10,000 from its all-time high, including a 20% drop over the past seven days.