Ethereum

Bank

JPMorgan

Bitcoin

JPMorgan analysts, led&nbsp;by managing director Nikolaos Panigirtzoglou,&nbsp;do not view Michael Saylor's <a href="https://www.thestreet.com/crypto/markets/bitcoin-miners-surge-as-strategy-makes-another-sale" rel="noopener noreferrer nofollow">Strategy</a> (NASDAQ: MSTR) as a primary risk to "King Crypto."
In an exclusive interview with <a href="https://www.theblock.co/post/407776/jpmorgan-bitcoin-risk-strategy-blockchain-tokens-crypto" rel="noopener noreferrer nofollow">TheBlock</a>, the bank said,
<blockquote>
 "We do not see Strategy as the main structural threat to Bitcoin."
</blockquote>
Strategy remains one of Bitcoin's major buyers. It has acquired roughly $13.7 billion worth of Bitcoin this year, about 70% of JPMorgan's estimated total net digital asset inflows.&nbsp;
At the same time, the company also changed its "never sell Bitcoin" strategy to make <a href="https://www.thestreet.com/crypto/markets/michael-saylors-strategy-sells-bitcoin-again" rel="noopener noreferrer nofollow">two Bitcoin sales</a>.&nbsp;The first sale had created a cascading effect for Bitcoin.
Moreover, the company's formalized policy allows it to sell Bitcoin to fund preferred stock dividends, repurchase shares, or optimize its capital structure.&nbsp;
JPMorgan had earlier said that the shift introduced "avoidable" two-way risk into crypto markets by turning one of Bitcoin's biggest buyers into a potential seller.
<a href="https://www.thestreet.com/crypto/markets/michael-saylors-strategy-sells-bitcoin-again" rel="noopener noreferrer nofollow">Related: Michael Saylor's Strategy sells Bitcoin again</a>
<h2 id="the-bigger-threat">The bigger threat</h2>
Instead, the analysts said the more significant long-term risk to Bitcoin comes from blockchain adoption that fails to create value for public blockchains and their native tokens.&nbsp;
<blockquote>
 "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," the analysts wrote.
</blockquote>
Institutional adoption has so far favored permissioned blockchains, which offer greater privacy, <a href="https://www.thestreet.com/crypto/innovation/ava-labs-reveals-avalanche-strategy-for-compliant-global-payments" rel="noopener noreferrer nofollow">Know-Your-Customer</a> (KYC) and Anti-Money Laundering (AML) controls, governance, throughput, and regulatory certainty.&nbsp;&nbsp;
This creates what JPMorgan called a "competitive threat" for public networks such as <a rel="noopener noreferrer nofollow">Ethereum</a> (ETH).&nbsp;
The analysts cited the Bank for International Settlements, which has warned against using public permissionless <a href="https://www.thestreet.com/crypto/innovation/blockchain-is-quietly-moving-into-the-cattle-industry" rel="noopener noreferrer nofollow">blockchains </a>for systemically important financial infrastructure, instead promoting permissioned "unified ledgers" combining tokenized central bank money, commercial bank deposits, and tokenized assets.
<h3 id="trending-on-thestreet-roundtable">Trending on TheStreet Roundtable:</h3>
<ul>
 <li><a href="https://www.thestreet.com/crypto/markets/analyst-reveals-the-exact-bitcoin-level-where-hed-become-a-buyer" rel="noopener noreferrer nofollow">Analyst reveals the exact Bitcoin level where he'd become a buyer</a></li>
 <li><a href="https://www.thestreet.com/crypto/markets/analysts-flag-most-encouraging-signals-for-bitcoin-and-ethereum" rel="noopener noreferrer nofollow">Analysts flag 'most encouraging signals' for Bitcoin and Ethereum</a></li>
 <li><a href="https://www.thestreet.com/crypto/markets/jpmorgan-ceo-dimon-sends-blunt-message-on-clarity" rel="noopener noreferrer nofollow">Jamie Dimon sends blunt message on CLARITY</a></li>
</ul>
Banks are already building alternatives, the analysts noted, pointing to tokenized deposits, SWIFT's blockchain ledger pilot with 17 banks, and central bank digital currency projects like the digital euro and digital yuan.&nbsp;
If tokenized deposits gain wide adoption, they could reduce demand for<a href="https://www.thestreet.com/crypto/explained/explained-what-is-a-stablecoin" rel="noopener noreferrer nofollow"> stablecoins </a>in institutional payments.&nbsp;
Real-world asset <a href="https://www.thestreet.com/crypto/tag/tokenization" rel="noopener noreferrer nofollow">tokenization</a>, too, may increasingly stay within traditional financial infrastructure rather than moving onto public blockchains. This is a shift JPMorgan said could eventually trigger a "structural de-rating" for crypto broadly, weighing on Bitcoin over time.
<a href="https://www.thestreet.com/crypto/markets/this-is-what-1000-investment-in-strategy-10-years-ago-is-worth-today" rel="noopener noreferrer nofollow">Related: This is what $1,000 investment in Strategy 10 years ago is worth today</a>

JPMorgan sends stark warning on the real threat to Bitcoin

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TheStreet Roundtable

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