Thoughts on Bitcoin

Bitcoin is heading for Wall Street

“It (Bitcoin)’s a fraud”

Jamie Dimon, JP Morgan CEO said this in 2017.

According to anonymous sources, JPMorgan Chase is working on launching a fund to allow its clients to invest in bitcoin.

JP Morgan’s bitcoin fund could be launched later this summer, with NYDIG as custodian, which is also already involved with Morgan Stanley’s application for a BTC ETF.

The fund will be actively managed and offered to certain private clients, unlike other similar funds, such as those of Pantera Capital and Galaxy Digital, whose funds instead passively replicate the price of bitcoin.

This would be a major shift for the bank, whose CEO Jamie Dimon in 2017 bluntly called bitcoin a fraud. JP Morgan has already been active in the blockchain sector for some time, so the news of its direct entry into the bitcoin market does not actually come as a complete surprise.

2021 is turning out to be the year in which, one by one, the big institutional players in the global financial system are entering the crypto market, often offering services to their clients to enable them to invest in this market.

Goldman Sachs restarted its cryptocurrency trading desk and will begin offering Bitcoin futures and other products by mid-March. The bank first launched the desk in 2018, then halted it later that year as Bitcoin prices fell 80% from their 2017 spike.

Goldman’s 2020 report espoused “We believe that a security whose appreciation is primarily dependent on whether someone is willing to pay a higher price for it is not a suitable investment for our clients,” the bank wrote in May. “We do not recommend Bitcoin on a strategic or tactical basis for clients’ investment portfolios even though its volatility might lend itself to momentum-oriented traders.”

But Goldman now has also issued a request for information to explore digital asset custody and is looking into a Bitcoin exchange-traded fund. As it stands, the crypto trading desk would be couched in the bank’s global markets division, the wire service reported.

In other words, these institutional players are not investing in bitcoin, but in bitcoin-based services. However, many believe that the directors of these giants themselves may have invested in BTC privately, and for the time being, do not want to make this known.

Ark Invest, one of the most progressive investment companies, said that its rapid growth has positioned bitcoin to earn an allocation in well-diversified investment portfolios. Bitcoin offers one of the most compelling risk-reward profiles among assets, as their analysis suggests it should scale from roughly $200 billion today to $1–5 trillion network capitalization during the next five to ten years. In our view, capital allocators must consider the opportunity cost that will be associated with ignoring bitcoin as a new asset class.

Bitcoin has risen around 80% since the start of the year as more institutional investors and major companies like Tesla has jumped into the market, believing it to be a portfolio diversifier in the event of rising inflation. It’s down roughly 17% from an all-time high of nearly $65,000, however.

Joe Biden’s tax raising plans for wealthy investors helped to blow up cryptocurrency valuations today as bitcoin skidded to 25% below last week’s record high. Biden is expected to raise the long-term capital gains tax for the wealthiest Americans to 43.4%, including a surtax. That triggered a brief dip in stock markets, and analysts said fears over the proposal may have extended to the crypto market.

The Crypto market is Bitcoin Market. So we have to focus on US capital-gain tax and benchmark interest rate.

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