In the year 2021, Bitcoin is no longer termed as a fool’s errand, scam, fraud, pyramid scheme, amongst other things. Banks that had heavily criticized Bitcoin, have changed their stance and started buying into Bitcoin and other cryptocurrencies. There may be some disagreements, but tides are evidently changing.
JPMorgan Chase (NYSE: JPM)
In September 2017, JPMorgan Chase’s (NYSE: JPM) Chairman and CEO Jamie Dimon, said: “Bitcoin is a fraud” at the Delivering Alpha conference presented by CNBC and Institutional Investor.
Fast forward to July 2021, Advisors in JPMorgan’s $630 billion wealth management division can now accept orders to buy and sell five crypto products including Grayscale’s Bitcoin Trust, Bitcoin Cash Trust, Ethereum Trust, Ethereum Classic products, and Osprey Funds’ Bitcoin Trust. In this category, private bank clients typically have at least $10 million in assets and are considered more sophisticated investors.
Morgan Stanley (NYSE: MS)
Adding on to the list, Investment banking giant Morgan Stanley is now the second-largest shareholder of the Grayscale Bitcoin Trust (OTCMKTS: GBTC) after ARK Investment Management. According to recent SEC filings, Morgan Stanley owns over 6.5 million shares of GBTC worth over $240 million at the time of writing.
Other banks investing in cryptocurrency
- Standard Chartered Ltd. (SCBFY)
- Bank of New York Mellon Corp. (BK)
- Citigroup Inc. ©
- UBS Group AG (UBS)
- BNP Paribas ADR (BNPQY)
- Morgan Stanley (MS)
- JPMorgan Chase & Co. (JPM)
Unpolished gem, now polished?
Bitcoin was once unloved by big institutions, banks and remained only popular with retail buyers. The shift has started, with institutions and banks investing in the cryptocurrency space. Also in 2021, El Salvador became the first country to adopt Bitcoin as legal tender, enacting legislation that will take effect in September.
What does it mean for regular investors?
Institutions and banks buying into cryptocurrencies should give investors a boost in confidence in believing Bitcoin and other cryptocurrencies are here to stay.
It would be wise, to invest a percentage of the portfolio into cryptocurrency, let’s say 5%. Invest in the big names like Bitcoin, Ethereum, which have been proven to have utility. Do not invest in cryptocurrencies that are widely advertised to ‘pump’ and make huge gains in a short time. Those cryptocurrencies are mostly useless and only serve as a speculation tool, for the purpose of ‘pump and dump’.
The mentality of investing in cryptocurrency should be like investing in a stock. Invest in companies that have sound fundamentals, can generate revenue, have the potential to do well in the future. Similarly, there are also penny stocks that could be here one day, and gone the next day, much like new cryptocurrencies that sprout out daily.
Risk Management
There is undoubtedly risk in cryptocurrency investment, also much like investing in a stock. The discount dollar averaging method should be used, investing a portion when there are price dips. Allocate a portion of your portfolio to invest in cryptocurrency, around 5%. Using a portion to buy into either Bitcoin or Ethereum, when there are price dips of maybe 10–15%, rather than buying a big position immediately.
At this time of writing, the writer is long on Bitcoin, Ethereum.
Disclaimer: Always do your due diligence before investing in a stock. Investing of any kind involves risk. I am not a financial advisor. Your investments are solely your responsibility and I do not provide personalized investment advice. It is crucial that you conduct your own research. I am merely sharing my opinion with no guarantee of gains or losses on investments. Please consult your financial or tax professional prior to making an investment.
