Bitcoin is an “economic side show” and a “poor hedge” against a decline in equity prices, JP Morgan analysts have claimed in a memo, which may or not put off some from investing in the “digital gold”.

Current Bitcoin prices are well above JP Morgan’s estimates of “fair value” as the mainstream adoption of Bitcoin increases its correlation with cyclical assets. This reduces the benefits of diversifying into Bitcoin, the investment bank said in its memo.

Elon Musk's Tesla recently purchased $1.5 billion-worth of Bitcoin, which helped to drive up mainstream interest in the currency and its value.

Bitcoin is currently trading at over $51,000, down from a record high of almost $53,000 this Wednesday.

Rival cryptocurrency ether has reached a value of almost $2,000.

“Crypto assets continue to rank as the poorest hedge for major drawdowns in equities, with questionable diversification benefits at prices so far above production costs, while correlations with cyclical assets are rising as crypto ownership is mainstreamed,” JP Morgan said.

Bitcoin’s supporters though argue that the cryptocurrency is “digital gold” that can hedge against inflation and declines in the dollar.

But based on that logic, Bitcoin would need to rise to $146,000 in value for its market capitalisation to equal total private sector investment in gold via exchange-traded funds or bars and coins, said JP Morgan analysts.

The likes of Musk and others have said it may well reach that level of value.

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