Yesterday, just yesterday, two events made Bitcoin news. First, Chicago Mercantile Exchange (CME) announced they would be trading Bitcoin futures by the end of 2017. Then, on CNBC Brian Kelly made a glowing endorsement of Bitcoin as a stable, promising investment. Bitcoin, perhaps as a result of these praises moved to new heights. This morning Bitcoin hit an all-time high of $6624. Breathtaking.
Today, Bloomberg says the CME announcement “legitimizes” Bitcoin. This is a very important distinction for any would-be Wall Street investment. As evidenced by today’s trading volume and all-time high prices, Bitcoin is only beginning to reap the benefits of large investments that were bound to follow. Bitcoin’s market cap is now about $110B, somewhat less than half the size of VISA. Bitcoin is hardly a mainstream idea yet.
There will be a quantum leap in the speed and size of Bitcoin investments when big money Wall Street investors decide to invest. However, as of yet, no big bank has declared a willingness to trade in Bitcoin using client money. There have been no Wall Street investment firms buying or selling Bitcoin for customers. Fidelity has started a Bitcoin mining operation but that is a far cry from trading bitcoin. Quite the contrary, Jamie Dimon, CEO of JP Morgan Chase declared that bitcoin is a “fraud,” and, he would fire anyone in his firm that traded bitcoin. Other big bank CEO’s are not as negative but remain on the sidelines and are cautiously optimistic about Bitcoin’s prospects. This might change very shortly.
Along with Chicago Mercantile Exchange’s (CME) announcement that they would begin trading bitcoin futures by the end of the year, CNBC’s Brian Kelly, who has been a cryptocurrency advocate for several years, today recommended Bitcoin as an investment. This is huge. This could open the floodgates.
Jamie Dimon criticized Bitcoin once again yesterday, telling CNBC cryptocurrencies were a “novelty” and said they are “worth nothing.” Soon after, a Swedish company filed a market abuse complaint saying that he knowingly spread false information to influence the marketplace. Jamie Dimon is not being ignorant about Bitcoin and cryptocurrencies; he knows all too well what Bitcoin will mean for his business. As head of JPMorgan Chase, Jamie Dimon oversees seven trillion dollars in trade daily. JP Morgan Chase provides security and ease-of-use for its customers doing that much business each and every day. Jamie Dimon recognizes that Bitcoin can do the same thing without cost. Of course he is concerned.
After his first Bitcoin bashing, the price fell from a high of $4325 to a low of $2976 in just a few days. His statement coupled with the Chinese government announced that they would put a stop to all new cryptocurrency IPO’s and end trading altogether in Bitcoin soon was a double whammy for the Bitcoin marketplace. Bitcoin soon recovered to a short-term high of $4036 and is now currently at $3756. There has been no appreciable change in price since Dimon’s second interview.
These are very interesting times for Bitcoin. Everyone wants to know where Bitcoin will wind up. Will it take off like a rocket on its way to $10,000 by years’ end and $100,000 by the end of 2018 as some are predicting? Will it crash and burn as Dimon suggests? Will the banking industry do what it can to slow the relentless progress and inevitability? The banks are not going to go down without a fight. You can bet on that. For the banks, all of the money they invested in getting support for credit card legislation, mortgage loan failures and protections, the bankruptcy laws, Glass-Steagall repeal, and the aftermath of the recession of 2009, means they know how to spend money to get things done in Congress. I would not be surprised if the Congress votes to shut down cryptocurrencies as did China. But it’s actually too late for that. Japan just voted to make cryptocurrency legal tender. Countries around the world are already using it. There have been rumors that Amazon will start accepting Bitcoin by end of October 2017. The good news is that we’re going to see how this all plays out in short order.
Not for people who like safe and familiar things, investing in Bitcoin can be a nerve-racking, scary experience. As of this writing, Bitcoin in $3387.86, down $1226.17 from twenty-four hours ago. It’s no fun watching 25% of your investment vanish in less time than it takes for a check to clear.
But if you’re a believer, this is a time to buy. Bitcoin has only ever fallen this far, this fast, a couple of times in its nine-year history. News of the Chinese government cracking down on new cryptocurrency IPO’s and threatening to stop the trade in bitcoin all together, coupled with Jamie Dimon’s, CEO of JP Morgan Chase, a pronouncement on CNBC that bitcoin is a fraud, there’s no wonder that bitcoin will react violently. This is a good test of its vitality. Any investments made here are going to be fruitful. With blinders on, you just have to dive in.