The Six Stages of JPMorgan’s Love-Hate Relationship With Bitcoin

Photo by Sophie Backes on Unsplash.
Photo by Sophie Backes on Unsplash

Yerevan (CoinChapter.com) — JPMorgan Chase & Co is falling in love with Bitcoin years after ridiculing it as a financial vampire that could suck profits out of any living portfolio.

The New York-based investment bank could offer its wealthy clients the option to invest in Bitcoin funds for the first time, according to CoinDesk. It reportedly plans to roll out the bitcoin-focused service in the summer of this year, stepping away from its earlier criticism of the cryptocurrency in lights of its booming adoption on Wall Street.

In retrospect, Bitcoin rose by up to 1,582 percent from its mid-March 2020 low of $3,858, hitting $64,899 in April 2021. Investors moved their capital into the cryptocurrency markets against their fears of higher inflation led by the Federal Reserve’s open-ended bond-buying program and ultra-low interest rate, launched to cushion the US economy from the aftermath of the coronavirus pandemic-led recession.

Bitcoin in a consolidation phase, trading at $54599. Source: BTCUSD on TradingView.com
Bitcoin in a consolidation phase, trading at $54,599. Source: BTCUSD on TradingView.com

Some of the most prominent investors with exposure in Bitcoin include Tesla, MicroStrategy, Square, Ruffer Investments, Seetee AS, Meitu, and many others. Meanwhile, the growing institutional interest has prompted investment services to launch crypto-enabled services. Before JPMorgan, its top rivals Goldman Sachs and Morgan Stanley have already announced Bitcoin investment services for their wealthy clients.

‘I Hate You Like I Love You’

JPMorgan had a very skeptical approach to Bitcoin, so the recent turn of events was unlikely. In fact, the relationship between JPMorgan and Bitcoin was anything but steady. The Twitterverse took to the recent event, posting flagship headlines that describe it best.

Jamie Dimon, the chief executive of JPMorgan, was less than kind to bitcoin. The 65-year old American billionaire called the benchmark cryptocurrency “fraud” in his 2015 interview with Fortune. He stated that cryptocurrencies are a “waste of time” and have no place in the real world. He then added that no government would put up with it for long.

However, not much changed in 2017. Mr. Dimon remained skeptical about the real-world implications of cryptocurrencies, telling CNBC that he believes Bitcoin has “no real value.”

The main concern for JPMorgan analysts was the high volatility of cryptocurrencies like Bitcoin. After the electric car giant Tesla adopted Bitcoin in Feb 2021, the investment company responded:

“The main issue with the idea that mainstream corporate treasurers will follow the example of Tesla is the volatility of Bitcoin. Even making a small 1% allocation in BTC would cause a big increase in the volatility of the overall portfolio.”

JPMorgan analysts stated.

JPMorgan Change of Heart

However, as Bitcoin grew more mainstream, gradually losing volatility, JPMorgan revised its overall approach to Bitcoin. In 2020, the investment bank added Coinbase (the world’s leading crypto exchange) to their clients after rejecting them for years.

Later, in March 2021, JPMorgan launched a crypto exposure basket to indirectly provide investors with exposure to the highly volatile asset class. It lowered the risks for clients.

As the year progressed, JPMorgan also took an increasingly bullish approach to Bitcoin. In April 2021, the company revised the price target to $130,000, as the volatility of BTC continued to decline.

Meanwhile, the positive dynamic continued to the end of April with JPMorgan’s reported decision to offer Bitcoin funds to their well-heeled clients. Incorporating crypto in the banking giant’s portfolio may act as a cushion against ongoing Bitcoin price correction.

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