Has JPMorgan Become Bitcoin’s Best Friend?

There was a lot of fanfare made recently over an investment note from JPMorgan Chase which seemed to elevate bitcoin over real estate and other traditional asset classes as the “alternative asset of choice.”

A May 25 investor note made the argument that bitcoin was around 28% undervalued and that the bank was targeting an upside price of around $38,000 per coin, in effect making an argument for bitcoin’s recent price weakness being overdone relative to real estate, private equity and private debt.

Jamie Dimon, refuses categorically to jump on board the bitcoin bandwagon.

If anything, Dimon’s antipathy to bitcoin rivals only that of European Central Bank (ECB) President Christine Lagarde, who continues to peddle the idea that bitcoin has no value because, of course, it lacks the backing of a central bank and/or government.

This is Dimon’s public beef with bitcoin as well. He’s been very clear about this: Bitcoin doesn’t matter because it has no official support or backing. Since JPMorgan is one of the shareholders of the New York Federal Reserve Bank, you really can’t blame him for “talking his book,” just like Lagarde or another famous bitcoin hater, Charlie Munger of Berkshire Hathaway.

interview in May 2021, he said the following:

“I’m not a bitcoin supporter,” Dimon said during The Wall Street Journal CEO Council summit on Tuesday. “I don’t care about bitcoin. I have no interest in it.”

“On the other hand, clients are interested, and I don’t tell clients what to do,” he said.

“Blockchain is real. We use it,” according to Dimon. “But people have to remember that a currency is supported by the taxing authority of a country, the rule of law, a central bank.”

There are a lot of ideas in these quotes from Dimon. He’s the CEO of one of the largest, most powerful and influential banks in the world and he maintains that business by being smart enough to give his customers what they want, even if he himself is not interested in that product and/or is working on products which are, tangentially, its competition.

hashing power from China to the U.S. over the past couple of years, there is more interest than ever in finding ways to sell cryptocurrency-related products to investors, while Wall Street finds ways to accumulate on pullbacks while amping up the FUD whenever the price rallies.

Why do you think Dimon hates bitcoin? It’s not because it’s a challenge to his company’s business. It’s for the same reason that he and Munger hate gold. Munger can’t lobby some government official to create a one-way trade for him to “invest” in it and Dimon can’t structure a product around it to build a regularly-occurring income stream from it.

two and 20 income” streams on something people just want to buy and HODL for the end of times? This is why, from the very beginning, Dimon and people like him have only had eyes for Ethereum and DeFi, while decrying bitcoin as having no “there there.”

Of course, nothing could be further than the truth. Bitcoin, like gold and other assets that exist independently of the financial system — what Credit Suisse’s Zoltan Pozsar recently termed “outside money” — are the very things that have the capability of re-establishing financial discipline on the world.

But that puts at risk the very nature of the existing system, even though that system is creaking along on its last legs and both Munger and Dimon understand this better than anyone.

Bitcoin, and cryptocurrencies in general, are fighting an insurrectionist fight attempting to reverse the wealth extraction dynamic of the existing system. Remember, Dimon and the rest of the New York Boys have made their trillions on extracting rent (unearned wealth) from the world through the Cantillon effect of being close to the source of new money.

World Economic Forum’s Klaus Schwab will fight tooth and claw to remain relevant players going forward. This is why JPMorgan on the one hand can and will recommend bitcoin to its family office and investment house clients, but on the other spend billions developing a payment layer to replace SWIFT.

In fact, I find the fight surrounding Ripple (XRP) to be far more interesting than whether or not Dimon and JPMorgan are finding ways to make money with bitcoin. Dimon is backing his product through ConsenSys, Schwab and the WEF are backing Ripple and, in my view, the U.S. Securities and Exchange Commission (SEC) lawsuit was a poison pill left behind by outgoing SEC Chair Jay Clayton for Gary Gensler while everyone works to slow down the real crypto-revolution, where none of these oligarchs and rent-seekers are needed anymore.

Larry Fink of Blackrock and Brian Moynihan of Bank of America, to name a couple.

JPMorgan is no friend to bitcoin, but Dimon is fully aware of the real threats to not only the current system, in which he’s a central player, but also to any and all potential escape routes desired by his best customers.

This is why I can see him happily allowing bitcoin to develop to undermine Schwab and the WEF while simultaneously working to undermine it in the long run with his own preferred solutions.

Personally, I think he’s doomed to fail as I think Schwab is as well. The way in which both of them appear to succeed in the short-term will be frustrating as hell for bitcoin enthusiasts to watch. But they are both fighting against a tide whose time is long overdue.

Never in the history of capital markets have commodity prices been this cheap relative to that of equities (like the S&P 500) or debt assets. Bitcoin, being the first derivative of energy to procure commodities in the real world where real wealth is built, is then, by extension, criminally undervalued as well.

Dimon, Schwab and their lieutenants at the Fed and the ECB can keep the flow of their overvalued dollars and euros high to reinforce their dominance but they also need to restrict their supply to keep inflation from eroding the political power from which their currencies, by their own admission, derive their market share.

That is the catch-22 that Dimon and JPMorgan find themselves in today. Friend or foe, bitcoin doesn’t care. It will just keep accreting value and building a network strong enough to allow us to ignore their grand dreams of global control.

This is a guest post by Tom Luongo. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.