Jamie Dimon, CEO of JPMorgan does not like bitcoin. He made this emphatically clear with his latest rant, this time targeting bitcoin and labeling it “a fraud”. He went on to say, “It won’t end well. Someone is going to get killed,” and his only supporting argument was that “[Fiat] currencies have legal backing.”
Legal backing. Of course traditional fiat currencies have legal backing. As a result, they also have mind-blowing amounts of regulation and red tape that strip away the value of them over the long term. Bitcoin has insofar managed to escape both and evade devaluation by applying a hard cap, but those are defining paradigms, not drawbacks. In other words, Mr. CEO, bitcoin has done one hell of a job of pummeling your posterior.
At the same time, bitcoin may not have legal backing yet, but it has turned enough heads that many governments are giving it a closer look and finding out how to integrate it, and the blockchain technology behind it, with existing systems. Earlier this month Finland released results of its in depth study on the subject, and recognizing its “revolutionary” attributes. On 3 July South Korea legalized cross-border bitcoin transactions and has recently defended its users. Russia began drafting legislation earlier this month that promises to legalize all cryptocurrencies within its borders by the end of the year. Anton Siluanov, a Russian Finance Minister, defended the move saying,
“All countries are working to legislatively regulate the use of this financial instrument…”
It sounds like “all countries” know something that Jamie does not.
His resentment is understandable. Bitcoin has launched itself headlong into territory that he and his cronies previously controlled. Blockchain, through digital coins, is the only technology to date that can challenge the hegemony of international banks, and it is doing just that.
Bitcoin has appreciated 310% year-to-date, and the traction it’s gaining is beginning to look like a threatening trend (from Jamie’s perspective). It is off its all time highs, however, battered by chinese ICO bans and exchange regulation, and the timing of this statement is suspect to say the least. Now that bitcoin’s momentum is wavering, many are seizing this opportunity to speak soberly against it where they would not have if it were still on an upward tear. After all, if the negative rhetoric pushes it further into bearish territory, it merely offers a more attractive buying opportunity. Maybe that’s the ulterior motive.
Jamie Dimon is not unintelligent. His leadership has paved the way for an exciting year, as shares of JPMorgan have risen nearly 28% from a year ago. 2Q 2017 earnings were abnormally strong, posting $7 billion in net income and exceeding analyst expectations by $0.24 per share. In fact, JPMorgan has been the best performing US Bank since the Financial Crisis. His words do have weight, so perhaps a few years down the road they will prove to be retrospectively insightful.
Bitcoin was down 1% after Dimon’s comments, but have nearly bounced back as of the time of posting. Its future is uncertain, especially in the wake of the China disturbance, but it is holding its ground above the $4,000 threshold. Resiliency is an attractive quality for any asset, and bitcoin is starting to show it.
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