JP Morgan Report Shows Bitcoin Receiving More Institutional Interest, Stablecoin Use On The Rise

Over the last year, there have been repeated talks of growing institutional participation and interest in the world’s largest cryptocurrency Bitcoin. Moreover, several financial giants like ICE, Fidelity, CME, and others have been released their custodial and institutional trading solutions for Bitcoin.

In its latest report, Wall Street giant JP Morgan has talked of Bitcoin developments with respect to the rising interest among institutional investors. Finally, the banking giant has acknowledged the impact of Bitcoin in the global economy after its chairman Jamie Dimon vehemently criticizing the cryptocurrency two years back in 2017.

However, Dimon had to swallow his words later and said that he “regrets” for his strong criticism. Anyway, the latest Bitcoin report by JP Morgan speaks about the regulated establishments like ICE’s Bakkt and Chicago Mercantile Exchange (CME).

The report mentions that there was a significant rise in the institutional interest in CME’s Bitcoin derivative products in 2019. But it mentions that Bakkt’s options platform has yet to reach its full potential. The report mentions:

“While the ICE and Bakkt launch represented the advent of centrally-cleared Bitcoin options on a regulated U.S. exchange, a major milestone for the crypto market, the option volumes and open interest have so far been rather small.”

Bakkt launched its physically-settled Bitcoin futures contracts in late September 2019. The same year in December 2019, Bakkt also launched its Bitcoin options contracts citing massive institutional demand.

Besides, the JP Morgan report states that Bitcoin’s volatility has reduced over the last year. But it still remains significantly higher over the traditional equity markets and hedges like the commodities. The report also mentions that “Blockchain has moved beyond experimentation and use in payments”.

In its report, JP Morgan praises the distributed ledger technology (DLT) aka the blockchain technology and says that it could be a potential game-changer for the financial sector, especially in the areas of clearing and settlements. But the banking giant thinks that blockchain hasn’t gone mainstream yet!

The report states: “Indeed, we believe that one of the reasons we have not seen even faster mainstream adoption of blockchain is the real world realization that there is a need for the verification of the information going into a blockchain.”

Besides, the report also mentions stablecoins and notes that their usage has significantly increased in 2019. It states that stablecoins have the potential “to grow substantially in global transactional activity despite challenges inherent in the microstructure of operating such a payment system.”

But it states that privately-owned stablecoins like Facebook’s Libra and other similar projects could likely face regulatory hurdles. The thing is central banks of powerful economic countries have been experimenting with the central bank digital currencies (CBDCs), a type of stablecoin corrected to the national currency.