Spark Global Limited reports:
JPMorgan has become the first major bank to “offer cryptocurrency funds to high-net-worth retail investors”. The move applies to all of its clients, including those who use the Small Motorcycle trading app, the vast majority of wealthy clients whose assets are managed by jpmorgan Advisors, and the super-rich served by its private bank.
Cryptocurrencies have grown dramatically over the past four years. Back in September 2017, jpmorgan Chase CHIEF Executive Jamie Dimon lashed out at bitcoin, calling it “a fraud” and a “bad death” for institutional investors when it first emerged. And predicted that it would lead to a speculative bubble worse than the 17th-century Dutch tulip bulbs. He also said he would fire any trader foolish enough to trade bitcoin. In May, Jamie also publicly disapproved of the asset class
But now the tables have turned. Jpmorgan chase, which once railed against bitcoin, has set up a Bitcoin fund for wealthy clients, and market analysts who used to disparage bitcoin and other cryptocurrencies in the media are catching up on the digital currency news.
The bank has been expanding its $630bn wealth management business this year. This week, the bank announced that it will be able to trade five cryptocurrency products, including four from Grayscale Investments and one from Osprey Funds, effective July 19.
However, jpmorgan’s advisers can only handle cryptocurrency trades on request, meaning they can’t recommend cryptocurrency products to clients, they can only trade on request. But the current policy could be loosened further if more clients voluntarily turn the decision over to advisers.
Business Insider also says jpmorgan has agreed to accept the Grayscale Bitcoin Trust, the Bitcoin Cash Trust, the Ethereum Trust, the Ethereum Classic Tool, and the Osprey Fund’s Bitcoin Trust.
The move is significant for jpmorgan, which analysts say wants to generate more fees in the face of explosive deposit growth and stagnant lending.
Other big banks, such as Goldman Sachs, Morgan Stanley and Bank of America, have yet to offer direct cryptocurrency funds to retail wealth clients, but other competitors are also moving in, given the growing number of family offices that manage the assets and personal affairs of the wealthy looking to invest in cryptocurrencies.
According to a recent Goldman Sachs survey, 15% of clients surveyed, including more than 150 family offices worldwide, have invested in cryptocurrencies, and 45% are interested in joining them as a hedging tool, To accommodate “macroeconomic conditions such as high inflation and prolonged low interest rates resulting from a year of unprecedented global monetary and fiscal policy stimulus”. The attitude of these hidden family offices, which serve the rich, will affect several markets.
Some estimate that if these high net worth individuals each bought and held just one bitcoin, there would be no bitcoin in circulation. Of course, that’s not going to happen. At the very least, we all know that the vast majority of Bitcoin is in the hands of a few whales. According to j.p. Morgan, only 5 percent of the more than 18.7 million bitcoins currently in circulation have actually changed hands over the past year, meaning millions of bitcoins are held in a handful of accounts.
They also expressed interest in investing in the “digital asset ecosystem.” Meena Flynn of Goldman Sachs Private Asset Management:
“Most family offices want to talk to us about blockchain and digital ledger technology. They think it will be as productive as the Internet in terms of increasing efficiency.”
However, other clients surveyed indicated that they are still very concerned about the long-term value of digital currencies, even with the recent increase in the financial industry’s tolerance towards cryptocurrencies and blockchains. Bitcoin, the world’s largest cryptocurrency, is now more than 50% below its all-time high of nearly $65,000 in mid-April. On Tuesday, the price of bitcoin fell below $30,000 for the first time in a month, but overall, it is up more than 230 percent from last year’s level.