Jamie Dimon loves to hate Bitcoin — and J.P. Morgan thinks Bitcoin could reach $146,000. How does America's largest bank really feel about crypto?
J.P. Morgan and its key individuals have a history of approaching Bitcoin (and other cryptocurrencies) with skepticism. So why do they slag off the world’s leading cryptocurrency, while simultaneously putting out research that supports it?
J.P. Morgan claims that Bitcoin is replacing the use of gold as a hedge against inflation. Does the bank’s changeable approach to cryptocurrency illustrate a general conservatism towards Bitcoin and its competitors, or does it highlight a more sinister opportunism to manipulate mainstream sentiments on crypto? Let's take a closer look:
Pretty much anyone involved in the cryptocurrency ecosystem has heard someone reject the technology out of hand, either out of sheer ignorance or the supposed mass money laundering it facilitates (fact check: a fraction of crypto is used for illicit purposes, which cannot be said of good old cash).
Indeed, we've all endured comments from no-nothing naysayers who make claims like “it will be worthless some day” or “just remember, it isn't real money until it's cash in hand”.
These individuals usually have very little grasp on the actual technology (and usually don't understand that many crypto enthusiasts have already quantified the associated risks). In 2021, converting crypto to cash and getting it into your bank account is as easy as logging into your online banking app, once you’ve completed the necessary compliance checks. And it's scaring banks, who as intermediaries have to watch as their raison d'etre, to manage your money and take a nice cut each month, is slowly becoming obsolete.
Still, banks are entrenched in the current financial system and enjoy the patronage of governments worldwide, who in turn dictate regulatory policy for the crypto industry. Therefore, crypto enthusiasts still have to pay close attention when a major financial figure makes a similar statement.
Understanding this question requires readers to understand J.P. Morgan’s changing, disparate opinions on Bitcoin. Should we take their flip flopping seriously? And how much do their influence still matter?
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Who Are J.P. Morgan Chase & Co?
Formed in 2001, J.P. Morgan is a bulge bracket bank focused on multinational investments. The scale and size of J.P. Morgan Chase & Co. make them incredibly influential — therefore, they have a genuine ability to affect people's opinions on assets like Bitcoin or Ethereum. That being said, J.P. Morgan is also a very traditional bank with very strong ties to the centralized, traditional economy. They are accustomed to traditional investments, and seek to generate profits for their clients and are therefore inclined toward conservatism.
J.P. Morgan and Bitcoin — A Confusing History
- In April 2021, J.P. Morgan registered a Bitcoin fund with the SEC, encouraging investors to consider adding Bitcoin to their portfolio.
- On Nov. 4, they renewed a former prediction that Bitcoin would double in value to $146,000 in the long term. Conversely, they stated that Bitcoin’s volatility would only create a fair price of $35,000 on average.
- Ironically, on Oct. 11, J.P. Morgan CEO and billionaire Jamie Dimon made his most recent in a barrage of controversial crypto statements. He claimed that Bitcoin was worthless and overdue for regulation.
- J.P. Morgan stated that Bitcoin’s current success was due to it being used as a hedge against inflation.
- On Nov. 25, J.P. Morgan said that Ethereum could be a better investment than Bitcoin
Jamie Dimon’s Statements
It is important to remember that while influential, Jamie Dimon is a private citizen and his statements in October don't necessarily reflect the position of J.P. Morgan as a company. In interviews regarding the statements, Jamie also said that he doesn't advise people to smoke, but leaves his clients to make their own decisions. Overall, Dimon’s repeated messaging is concerned with the lack of regulation surrounding Bitcoin and other cryptocurrencies.
Bitcoin as a Hedge Against Inflation
If the large-scale acceptance of Bitcoin as an alternative for gold takes off, it will be a boon to Bitcoin's credibility.
Is JPM Right? Is Ethereum Better than Bitcoin?
What's behind J.P. Morgan's announcement that Ethereum (ETH) may be a superior investment to Bitcoin?
- The key to this argument is based on the fact that the value of ETH has risen more than 500% in 2021. This is compared to a 96% rise in the price of Bitcoin.
- ETH is the world's second most valuable cryptocurrency, and has numerous technological applications. Indeed, it is used as the platform for non-fungible tokens (NFTs) and is playing a crucial role in the decentralized finance (DeFi) industry.
While outwardly confusing, J.P. Morgan’s statements and positions reflect the volatility of the cryptocurrency market and the pressure and conflict that financial institutions, long at odds with this new killer technology, are feeling to get in on the action before their customers do it for them.
Crypto has existed well over a decade, but J.P. Morgan has been in the game for only a short while. Therefore, it stands to reason that J.P. Morgan is stuck striking a balance between wanting to give good financial advice, allowing their customers to make their own decisions and adapting to a rapidly changing crypto environment. Veteran investors in the crypto market are accustomed to a degree of volatility and unpredictability regarding the price of their assets. J.P. Morgan currently seems to be caught on its back foot.
In the end, the most important factor is the fact that the largest bank in America is paying attention and that they’re making careful forays into offering crypto services for their customers. Whether you're a crypto enthusiast or a skeptic, if J.P. Morgan Chase & Co. is paying attention to crypto, then you should be too.