JPMorgan Has Some Bad News For Bitcoin Bears

Just over two months ago, JPMorgan CEO Jamie Dimon said he considered bitcoin to be a “fraud” that “will not end well,” and would fire any JPM trader trading it. The very next day, one of JPM’s most respected analysts, quant wizard Marko Kolanovic wrote a lengthy report to substantiate his boss’ anger and skepticism, concluding that cryptocurrencies are most likely pyramid schemes and “that the future for cryptocurrencies will likely not be bright.”
Predictably, since then the price of bitcoin has tripled, ensuring that virtually all retail (and most institutional) investors are far more interested in trading highly volatile bitcoin, ethereum, and other cryptos than stocks, and JPM has been dragged – kicking and screaming – into reversing its position on cryptos, and at the end of November the WSJ reported that the bank was willing to help clients trade bitcoin (for a hefty fee) even as the bank’s CEO explicitly called the digital currency a fraud, effectively violating its fiduciary obligation.
And now, with just two weeks until December 18 when bitcoin futures will start trading on the CME and CBOE, JPM’s reversal has gone so far as prompting one of the bank’s top strategists, “Flows & Liquidity” author Nikolaos Panigirtzoglou to predict that the “introduction of bitcoin futures has the potential to elevate cryptocurrencies to an emerging asset class.” Which sounds quite different from “Bitcoin is a fraud.”
In “The emergence of cryptocurrencies”, Panigirtzoglou’s thesis is simple: the more widely accepted bitcoin becomes and the more widely traded especially on regulated trading platforms, the greater the cryptocurrency’s credibility, making it more appealing to both institutional and retail investors:
With bitcoin reaching the $10000 mark this week (Figure 1) partly fuelled by the prospective launch of bitcoin futures contracts by established exchanges such as CME and CBOE, the question that arises is about whether a new asset class is emerging, potentially competing with other more traditional asset classes. The prospective launch of bitcoin futures contracts by established exchanges in particular has the potential to add legitimacy and thus increase the appeal of the cryptocurrency market to both retail and institutional investors.

This post was published at Zero Hedge on Dec 2, 2017.