Banks Appetite for Bitcoin Increases as BTC Volatility Declines, JPMorgan Says

Banks Appetite for Bitcoin Increases as BTC Volatility Declines, JPMorgan Says

Large banking organizations and institutional investors could reinvigorate their demand for bitcoin soon, commented researchers from JP Morgan Chase & Co. They reasoned that BTC volatility levels have been decreasing in recent weeks, which could be the primary benefit for institutions.

BTC’s Volatility Plays a Role for Institutions

Analysts representing the giant US multinational investment banks, led by Nikolaos Panigirtzoglou, have been increasingly interested in reporting various BTC-related aspects lately. While some included bitcoin’s performance against gold, others highlighted the cryptocurrency’s notoriously high volatility.

However, the researchers have blasted the asset in the past for its considerable fluctuations that could go to double-digit percentages in a day. Now, though, they have admitted that the primary cryptocurrency has calmed lately, which could signify the entrance of banks and the reentrance of institutions.

“These tentative signs of Bitcoin volatility normalization are encouraging. In our opinion, a potential normalization of Bitcoin volatility from here would likely help to reinvigorate the institutional interest going forward.” – they wrote in a report cited by Bloomberg.

They indicated that the three-month realized volatility for the first-ever crypto asset has dropped to 86% after exceeding 90% in February. Furthermore, the six-month realized volatility has also declined to roughly 73%.

Thus, institutions and, more precisely, banking entities, who tend to steer clear from highly volatile assets, could be warming up to the cryptocurrency space.


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Are Banks Indeed Jumping on the BTC Wagon?

While US-based institutions, such as BlackRock and MassMutual, have been dabbling with BTC in recent months, American banks have been somewhat distant. Some, like Goldman Sachs, were even openly dismissive of BTC’s merits.

However, the tides are changing, perhaps led by Morgan Stanley. In the span of two months, the bank enabled its institutional clients to buy BTC through three funds, reportedly planned to acquire a stake in the crypto exchange Bithumb, and filed to receive BTC exposure of up to 25% for 12 of its funds.

Just several months ago, Goldman said that bitcoin was not an asset class and openly criticized the entire industry. Yet, the giant bank filed for a BTC ETF with the SEC and announced plans to launch bitcoin services to its wealth management clients later this year.

JPM has also had a controversial history with BTC as the CEO, Jamie Dimon, called the asset “fraud” a few years ago before publicly apologizing. Now, JPMorgan said that it will launch an exposure basket for crypto-focused public companies.

It’s also worth outlining that America’s oldest bank, BNY Mellon, also showcased a pro-crypto approach by releasing BTC custodial services.

Featured Image Courtesy of The Hill

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Published at Sat, 03 Apr 2021 13:52:12 +0000

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