In recent days, JP Morgan Chase, the bank that settles fraud cases left and right, has been on the radar. Being in the front of one’s mind is the only place that JP Morgan should be. Whether it’s fraud, deception, or both, JP Morgan CEO Jamie Dimon condones this behavior. Dimon, notorious for spooking markets, recently talked about Bitcoin being a scam and stated it was going to crash. The market moved from over $4,200 to $3,000 on his comments, along with Chinese regulators announcing ICOs to be illegal. While doing this, his firm was buying notes deriving their value from Bitcoin in Sweden. This isn’t the first or last time that JP Morgan will do this.
What is interesting is that a former JP Morgan trader has come out and stated that Dimon is fundamentally wrong in his views about Bitcoin. Daniel Masters was an energy and derivatives trader for Solomon Brothers, and then the head of global commodities at JP Morgan. Masters opened his own hedge fund in 1999 and then left in 2010 due to commodity prices being less volatile. What makes this interesting is that he left Wall Street for cryptos and believes that Bitcoin could replace fiat money. Masters also believes that the old way of building capital through bonds and stocks can be replaced by Bitcoin and blockchain technology. Masters’ Global Advisors Bitcoin Investment Fund believes that the tokenization of commodities, stocks, bonds, and precious metals will accelerate. Banks need to move to stay on the cutting edge, or they will be way behind. Masters is very bullish on the space compared to other asset classes.
He went on to prove his point by saying ”When you look at all digital assets currently trading, the combined market capitalization isn’t as high as a single one of the world’s 100 largest stocks. Further, Bitcoin is only the 65th largest currency in the world, and some of the larger currencies are highly problematic for political and economic reasons.”
Masters’ fund GABI consists of Bitcoin traders in various institutions. Institutions include Nasdaq, Chicago Mercantile Exchange, Chicago Board of Trade, and the Chicago Board Options Exchange. Masters deals with senior financial executives at each of these institutions, and they are all opposed to Jamie Dimon’s position. Another academic economist from Harvard has come out and expressed his concerns about Bitcoin. Kenneth Rogoff, from Harvard, who was the chief economist at the IMF for a few years, has said that the Bitcoin price would collapse. Rogoff is also the author of The Curse of Cash, which talks about phasing out large denominated bills as a way to combat tax evasion. He foresees this as a benefit to central banks, as they can implement a policy that they desire. This whole argument is that the governments wouldn’t allow this because they wouldn’t be able to collect taxes. Of course, blockchain technology was created so that the government can’t regulate it and spend frivolously. He argued that Japan’s decision to make Bitcoin legal tender makes Japan comparable to the tax haven of Switzerland. Looks like the power structures are getting scared of technology, as they may be replaced.
Cheers,
Colin Bennett