The US bank is suddenly turning bullish on Bitcoin’s long-term growth after trying to shun it for years.
Bitcoin the first time
JPMorgan has created a “Cryptocurrency Exposure Basket” for clients looking to bet on companies working in the crypto space, a filing on Tuesday showed.
The basket contains over 11 publicly-traded stocks with a direct or indirect focus on the crypto market, such as PayPal, MicroStrategy, Square, and Riot Blockchain. It is the first time that the US bank mentioned “bitcoin” in an official filing for a financial product that it wanted to introduce to clients.
BREAKING: JPMorgan has filed a set of documents for a ‘Cryptocurrency Exposure Basket’ with reference to #Bitcoin.
The filing, which lists 11 reference stocks in the basket includes MicroStrategy, Square, Riot, NVIDIA, Paypal, CME Group and more https://t.co/LKXb57KgG6 https://t.co/LLN2Ud8dvN pic.twitter.com/SqHoUCoz0o
— Bloqport (@Bloqport) March 9, 2021
Per the filing, the basket would be unequally weighted (meaning the 11 stocks would be in equal proportion) and would consist of companies that either hold or trade Bitcoin directly, are involved in the asset’s mining, and create payment products related to Bitcoin or other cryptocurrencies.
Who holds what?
MicroStrategy, the business analytics firm that holds over $1.5 billion worth of Bitcoin, would account for over 20% of the basket. Payments firm Square, which holds $50 million in BTC, would hold 18%.
If your investment underperformed the S&P 500 you diluted your wealth. If your investment underperformed #Bitcoin, you diluted your opportunity.
— Michael Saylor (@michael_saylor) March 9, 2021
Mining firm Riot Blockchain and chipmaker NVIDIA (whose computing chips are used extensively by Bitcoin miners) would each hold 15% of the basket, with recent crypto convert PayPal holding 10%.
Chipmakers AMD and Taiwan Semiconductor would each hold 5% of the basket, the Intercontinental Exchange group (operator of crypto exchange Bakkt) and the Chicago Mercantile Exchange (which offers BTC Futures) would hold 4%.
Overstock (which accepts Bitcoin as payment) and crypto bank Silvergate finish out the list with 2% holdings each.
The bank, however, mentioned that such a basket would be subject to “extreme price volatility” due to the nature of their underlying assets and could even see a “substantial decrease” in prices over time.
As such, the basket would be available via the “JPINCEG1” ticker on the Bloomberg Terminal, an enterprise trading hardware, and would be priced later this month on March 26. It would, in addition, reach “maturity”—the time period at the end of which the basket will cease to exist and the principal is repaid with interest—on May 5, 2022.
Naysayer turned believer
JPMorgan has long been a naysayer of cryptocurrencies, with CEO Jamie Dimon even once referring to Bitcoin as “fraud… worse than tulip bulbs.”
He even said at the time that any JPMorgan trader found investing in Bitcoin would be fired “in a second” and doing so was against the bank’s rules and that such activities were “stupid” and “dangerous.”
But he, like the bank, turned a new leaf starting in 2019. Dimon said he regretted calling Bitcoin a “fraud” and said that blockchain technology would have a pivotal role in the future of finance. For now, however, all eyes (and stocks) are betting on crypto.
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