Bitcoin Goes Mainstream as JPMorgan Reverses Stance

Jamie Dimon, who once threatened to fire traders for buying Bitcoin, now allows JPMorgan Chase & Co. (JPM) clients to purchase the cryptocurrency, signaling a shift in institutional acceptance, according to industry experts.

Its transformation from fringe asset to mainstream investment vehicle has accelerated in recent weeks, with JPMorgan's reversal, the addition of Coinbase Global, Inc. (COIN) to the S&P 500 and progress on stable coin legislation marking what experts call "the great derisking" of cryptocurrency—a process that's removing traditional barriers and potentially opening the floodgates to trillions in institutional investment.

"It's not the first one we've seen," said Matt Hougan, chief investment officer at Bitwise Asset Management, during a recent webinar hosted by the Digital Assets Council of Financial Professionals. "Remember, Larry Fink called Bitcoin an index of money laundering, and then called it an asset that could replace the dollar," he added, referencing the BlackRock Inc. (BLK) CEO's evolution on cryptocurrency.

Bitcoin Milestone

According to Hougan, the JPMorgan announcement marks another milestone in Bitcoin adoption. "I think JPMorgan will get there. I think you're going to see their clients buy billions of dollars of Bitcoin. It's another sign that Bitcoin is moving from the edges fully into the mainstream," he told webinar attendees.

The significance extends beyond a single bank, according to Ric Edelman, founder of the Digital Assets Council of Financial Professionals. "And let's keep in mind, of course, that if JPMorgan says this, the others have no choice but to follow," Edelman said during the presentation.

Hougan confirmed this industry-wide shift is already happening at major financial institutions. "This was already happening. JPMorgan is a part of a bigger story," he said, explaining that firms like Morgan Stanley (MS), Merrill Lynch, UBS Group AG (UBS), Wells Fargo & Co. (WFC) and regional broker-dealers are all moving in the same direction.

More Institutions Open Access

The shift comes as major wealth management platforms begin to allow Bitcoin investment. "There's about $30 trillion of wealth that has not been able to buy the Bitcoin ETFs yet, and that is just opening up right now," Hougan said during the webinar, referring to assets managed by major financial institutions.

The influx of institutional capital creates a fundamental supply-demand imbalance, according to Hougan. "The beauty of Bitcoin is its price is set by supply and demand," he explained, noting, "We create 165,000 new Bitcoin every year" while ETFs and public companies have already purchased more than the annual production in recent months.

"When increased demand meets with fixed supply, I think what happens there is the price goes up," Hougan added, explaining the economic forces that could drive Bitcoin's value higher as institutional adoption increases.

Hougan projected large price increases for Bitcoin over the next several years. "Our view is Bitcoin is going to get there in the next five years," he said, referring to a potential $1 million price target by 2029.

This price target is based it potentially reaching market cap parity with gold, which Hougan described as a $23 trillion market compared to the cryptocurrency's current valuation of approximately one-tenth that size.

For advisors entering the crypto market, Hougan recommended starting with client conversations and considering a measured approach to investing. "From an allocation perspective, I think there are good arguments to be made of dollar cost averaging into Bitcoin as a way of reducing behavioral risk," he advised.