JPMorgan Chase & Co., the American multinational investment bank, has formed an alliance with six Indian banks to inaugurate a blockchain-based platform that will handle interbank dollar transactions within India’s emerging International Financial Centre. This development, initially reported by Bloomberg, showcases the evolving landscape of financial technology (fintech) in India.
Kaustubh Kulkarni, JPMorgan’s Senior Officer in charge of Indian operations and Vice Chairman for the Asia-Pacific region, indicated that the project would enter a pilot phase in the upcoming months. This period is crucial for gauging the experience and adaptability of the participating banks, which include private sector entities like HDFC Bank Ltd., ICICI Bank Ltd., Axis Bank Ltd., Yes Bank Ltd., IndusInd Bank Ltd., and also JPMorgan’s banking division in GIFT City.
Upon obtaining approval from the International Financial Services Centre Authority, the pilot project will commence this coming Monday, utilizing JPMorgan’s proprietary blockchain platform, Onyx.
The present settlement system poses certain challenges, including potential delays that could stretch to several hours for settlement completion. Moreover, transactions are currently not processed on Saturdays, Sundays, or public holidays. The introduction of a real-time, blockchain-supported system has the potential to eliminate these constraints, offering round-the-clock transactional availability – a significant improvement in efficiency and convenience for the banking sector.
This pioneering initiative further propels the Indian government’s efforts to establish Gujarat International Finance tech -City (GIFT City) as an influential trading center. It echoes the ambition to compete with well-known international hubs like Singapore and Dubai, underlining India’s commitment to becoming a significant player in the global fintech arena.
As the global banking crisis continues to fuel concerns among investors, the popularity of US money market funds is surging. According to Emerging Portfolio Fund Research (EPFR) data obtained by the Financial Times, more than $286 billion has been invested in these funds so far in March. The inflows are the highest seen in a month since the emergence of the Covid-19 pandemic.
The top beneficiaries of this trend are Goldman Sachs, JPMorgan Chase, and Fidelity. The figures show that Goldman Sachs’ money funds have grown by 13%, receiving $52 billion in investment. JPMorgan’s funds have seen inflows of nearly $46 billion, while Fidelity has enjoyed nearly $37 billion in investment. These funds are offering their best yields in years, as the US Federal Reserve continues to raise interest rates in a bid to curb inflation.
Money market funds are a popular choice for investors during uncertain times because they offer high liquidity and low risk. The current crisis in the banking sector has only served to amplify these qualities. The fear of liquidity constraints and potential bank failures has caused many investors to seek out safer investments, and US money market funds are delivering the kind of stability that investors crave.
In the seven days leading up to March 22, total money market fund assets increased by $117.42 billion to $5.13 trillion, according to a report from the Investment Company Institute. Government funds increased by $131.84 billion, while prime funds decreased by $10.83 billion. Tax-exempt money market funds shrank by $3.61 billion.
The influx of cash into money market funds is driven by fears surrounding the health of the financial system. Banks in the US and Europe are facing liquidity constraints as monetary policy tightens, and investors are wary of the potential risks associated with these developments.
For example, on March 24, shares of Deutsche Bank dropped due to an increase in the cost of insuring against its potential default risk. The bank’s five-year credit default swaps (CDS) climbed 19 basis points from the previous day, closing at 222 bps, according to Reuters, citing S&P Global Market Intelligence data. Meanwhile, in the US, there is still uncertainty surrounding regional banks, as insurance on default for financial services firms Charles Schwab and Capital One soared last week. The latest data shows that credit default swaps jumped over 80% to 103 bps as of March 20.
The surge in popularity of money market funds underscores the ongoing concerns of investors in the face of a global banking crisis. With interest rates continuing to rise, and fears of liquidity constraints and bank failures mounting, it seems likely that this trend will continue in the months ahead.
JPMorgan Chase and Oliver Wyman, which is a corporation that specializes in consulting, worked together to do research on the potential applications of blockchain technology in commercial banking. The subsequent steps were for the two businesses to publish their findings in a report on February 9th, which was then made available to the entire public. On the other hand, the writers make it a point to underline the advantages given by deposit coins in terms of their dependability and stability. They say this as a point of differentiation between deposit coins and other cryptocurrencies. The authors highlight the benefits that may be obtained by using deposit coins, despite the fact that stablecoins and central bank digital currencies (CBDCs) have been the market leaders up until this point in time. Despite the fact that deposit coins could be utilized instead, this is still the case.
A depository institution will issue deposit tokens on a blockchain in order to guarantee that an accurate record of a deposit claim that has been made can be preserved. This will be done in order to ensure that an accurate record of a deposit claim that has been made can be maintained. Stablecoins and CBDCs, on the other hand, are often issued by a private company rather than a financial institution such as a bank. This stands in stark contrast to all that was just discussed. The fact that the issuer does not conform to the typical sort of financial institution is something that may work out to the issuer’s favor in a significant way. “Given that deposit tokens are commercial bank money embodied in a new technical form, they sit comfortably as part of the banking ecosystem, subject to regulation and supervision applicable to commercial banks today.”
The authors of the research note that regulation contributes to the development of trust, reduces the likelihood of a run on deposit tokens, and guarantees dependability all at the same time.
Financial tycoon, JPMorgan Chase (JPM), announced to use of blockchain technology in the collateral settlement, planning to expand to other asset types such as equities and fixed income, according to Bloomberg.
JPMorgan Chase used cryptocurrency tokens for collateral in traditional financial asset transactions for the first time on May 20.
Two of the bank’s entities are using tokens of BlackRock money market fund shares as collateral on their private blockchains, allowing trading outside of market hours.
Ben Challice, JPMorgan’s global head of trading services commented that:
“What we’ve achieved is the friction-less transfer of collateral assets on an instantaneous basis, they have been heavily involved since Day One, and are exploring use of this technology.”
To date, the bank has processed more than $300 billion in repo transactions using blockchain.
In addition to being used for derivatives and repo transactions and securities lending and other transactions, a blockchain-based collateral settlement will also expand the application scope of tokenized collateral, providing investors with a wider variety of assets to invest as collateral.
Intraday repurchases or repo refer to short-term borrowings with fixed income.
JP Morgan Chase, Ciena, and Toshiba announced to conduct research on a Quantum Key Distribution (QKD) system in groundbreaking research for better protection for blockchain networks from eavesdropping and quantum computing attacks.
JP Morgan has been crafting a name for itself in the blockchain/crypto space. For instance, it created a business unit dubbed Onyx to house its digital currency and blockchain efforts.
The leading bank also recently set foot in the metaverse through a virtual lounge.
On Monday, financial tycoon JPMorgan Chase (JPM) said it is making a “strategic investment” in San Francisco-based blockchain intelligence platform TRM Labs.
TRM Labs integrates more than a dozen blockchains, aiming to utilize blockchain technology to detect signs of financial crimes, such as fraud and money laundering, in real-time and help financial institutions, cryptocurrency companies, and public institutions deal with corresponding risk management.
TRM said its Labs’ products would help demonstrate the transparency of blockchain transactions, helping clients reduce risk and meet anti-money laundering (AML) regulatory requirements.
The company also offers forensics-focused products that enable law enforcement to investigate specific crimes such as theft or fraud originating from the blockchain.
Esteban Castano, co-founder and CEO of TRM, said in a statement:
“The JPMorgan investment clearly highlights the significance of the growing crypto economy and the importance of building trust and safety in this ecosystem to sustain its growth,”
Umar Farooq, CEO of Onyx, JPMorgan’s wholesale payments blockchain platform, echoed this:
“leading infrastructure companies like TRM will help usher in the future of secure blockchain and crypto use cases.”
These investment activities are well enough to show the importance of fraud detection in the emerging encryption industry.
San Francisco-based blockchain intelligence platform TRM Labs announced the company had completed a series A funding with a total value of $14 million on June 17.
The A-Round was led by Bessemer Venture Partners, a venture capital firm with 130 IPOs. The well-known digital payment company PayPal and the cloud-based software company Salesforce also contributed to this financing.
Analysts from American multinational investment bank, JPMorgan Chase & Co have placed the “Fair Value” of Bitcoin (BTC), the world’s first cryptocurrency at $38,000.
The projection of the fair value of the premier digital currency came despite the current price of BTC trading more than 10% from the set price, however, the analysts, led by Nikolaos Panigirtzoglou, ascertained that the fair value was estimated based on the extreme volatility of the digital asset which they say is about four times as high as that of Gold.
Bitcoins opened the year to a very bearish run, with prices falling massively on a continuous run from the All-Time High (ATH) above $68,000 back in November to a low of $33,184.06 in January.
However, renewed investor sentiments in the traditional markets have had a significant rub off on Bitcoin as it has been on an uptrend for the better part of February. The price of BTC at the time of writing was hovering around $44,076.25 to $44,500 as it looks to break through the $45,000 resistance.
These impressive price runs seem not to have impressed Panigirtzoglou and his team who suggested that the “fair value” of Bitcoin would rise to $50,000 in a scenario where the volatility level narrows to three times, a possibility that seems impossible, at least, in the near term.
With more funds injected to acquire Bitcoin, the cryptocurrency is poised to stabilize over time, but the analysts pointed out that the step back amongst institutional investors seen in the BTC ecosystem is fueled by the fears in the volatility of the cryptocurrency.
“The biggest challenge for Bitcoin going forward is its volatility and the boom and bust cycles that hinder further institutional adoption,” they wrote.
Despite the bearish fair value estimation the analysts pointed at, JPMorgan still maintains a bullish price target of $150,000, up from the projected $146,000 estimated back in January 2021.
Amid Bitcoin (BTC) posting a significant price recovery since early February, JPMorgan analysts suggested that the “fair value” of BTC is actually lower than its market price on Tuesday.
The current fair-value level for BTC is around $38,000, JPMorgan strategists said in the bank’s latest investor note published on Tuesday. Led by JPMorgan crypto market analyst Nikolaos Panigirtzoglou, the strategists estimated the “fair value” based on Bitcoin being nearly four times as volatile as gold.
The “fair value” of Bitcoin would rise to $50,000 in a scenario where the volatility level narrows to three times, the strategists suggested, adding:
“The biggest challenge for Bitcoin going forward is its volatility and the boom and bust cycles that hinder further institutional adoption.”
At the time of writing, BTC traded around $43,000, or 12% up from the “fair value” suggested by JPMorgan. Bitcoin previously was inching close to $45,000, reaching around $44,900 on Tuesday, according to data from CoinGecko.
While being bearish on Bitcoin’s current “fair value,” JPMorgan’s strategists still forecast that BTC would surge far above $100,000 one day. According to the report, Panigirtzoglou’s long-term theoretical target for Bitcoin stands at $150,000, up from $146,000 forecasted in January 2021.
Related:Wall Street still not convinced on Bitcoin $100K this year: JPMorgan survey
JPMorgan’s analysts also noted that Bitcoin’s price correction in January looks “less like a capitulation” than the one recorded in May 2021, when BTC plummeted 50% from above $60,000 to around $33,000. However, some BTC metrics like futures open interest and reserves on exchanges are pointing to a “more long-standing and thus more worrisome position reduction trend” that began in November, the strategists reportedly added.
The strategists previously released a similar report in November, asserting that Bitcoin’s “fair value” was around $35,000, or about 45% lower than its market price of $63,281.
One of the world’s largest investment banks has its Bitcoin (BTC) price predictions ready for 2022.
In a recent poll, JPMorgan Chase asked its clients “where do you see Bitcoin trading at 2022 year-end?” Just 5% said they saw the digital coin reaching $100,000, and 9% saw it breaking previous all-time highs, reaching over $80,000.
The bank is known for its wealthy client portfolio. While some BTC bulls may welcome the news that 14% of JPMorgan’s clients expect at least a 2x, it’s not the fireworks the crypto market is accustomed to.
On balance, however, the survey is generally positive. Most clients (55%) see BTC trading at $60,000 or above at the end of the year, with only one quarter expecting prices to slide from the recent lows of $40,000.
“I’m not surprised by Bitcoin bearishness,” said Nikolaos Panigirtzoglou, the author of the research note who works as the managing director for London at JPMorgan. He continued:
“Our Bitcoin-position indicator based on Bitcoin futures looks oversold. The coin’s fair value is between $35,000-$73,000, depending on what investors assume about its volatility ratio versus gold.”
The group, which has over $2.6 trillion assets under management, is increasingly involved in the crypto space, particularly since its own token launch, JPM Coin in 2019. Part of the Big Four of American investment banks, it has been educating its customers and investors on the pros and cons of Bitcoin since July 2021.
Related: Arcane Research releases its crypto predictions for 2022
While its cards remain close to its chest, in September last year JPMorgan’s CEO, Jamie Dimon softened his stance on Bitcoin. He shared that Bitcoin could 10x in a matter of five years, but he still won’t buy any.
It’s in contrast to fellow billionaires Ray Dalio and Bill Miller, who suggest anything from 1% to 50% is a reasonable BTC allocation.
Amidst growing institutional adoption and calls for $200,000 in 2022 from other funds such as Fundstrat Global Advisors, it begs the question. Are JPMorgan Chase clients on the money, or are the Wall Street execs and other wealthy individuals decidedly bearish?
Bahrain is the latest nation to explore blockchain technology by American investment bank JPMorgan, with the country’s central bank trialing JPMorgan’s proprietary digital currency.
The Central Bank of Bahrain (CBB) has successfully completed a digital payment test in collaboration with JPMorgan’s blockchain and cryptocurrency unit Onyx, according to an official announcement published on Jan. 6.
The trial involved two other major institutions, Manama-based international bank, Bank ABC, and Bahrain’s national aluminum smelter Aluminium Bahrain, also known as Alba. The test enabled Bank ABC to settle real-time payments to Alba’s counterparts in the United States using the JPM Coin, a blockchain-based payment system and stablecoin pegged to the U.S. dollar.
According to the announcement, the CBB was responsible for supervising the trial.
CBB governor Rasheed Al Maraj said that the trial has been crucial for the government of Bahrain to address and potentially eliminate existing inefficiencies in the traditional cross-border payments industry.
“We are pleased to announce the success of this test, which is in line with our vision and strategy to develop and enrich the capabilities provided to stakeholders in the financial services sector in the Kingdom using emerging and pioneering technologies,” Al Maraj said.
The CBB previously disclosed plans to test out the JPM Coin in May 2021, stating that the trial could potentially extend to its central bank digital currency development.
Related:WhatsApp starts testing currency payments with Meta’s Novi wallet
Originally announced in 2019, JPM Coin was commercially launched in October 2020.
The investment bank has been actively promoting its blockchain tech for global use, partnering with Singapore’s largest bank, DBS, to pilot a blockchain payment system. JPMorgan previously provided its Liink blockchain technology to the State Bank of India to reduce transaction costs and improve cross-border payments.
Open interest (OI) for Bitcoin (BTC) Futures trading on the Chicago Mercantile Exchange (CME) inched toward a new record high Thursday as BTC reclaimed its five-month high of $58,550 on BitStamp.
The total number of outstanding derivatives contracts on CME Group’s Bitcoin Futures market reached $3.22 billion, according to data provided by ByBt.com, just $40 million below its record high logged in Feb 2021. Nonetheless, the OI came out to be higher than it was at the Bitcoin price’s peak in mid-April.
In detail, the Bitcoin Futures OI on CME was $3.02 billion on April 14, the day on which the BTC price—nearly reached $65,000. But on Thursday, the OI was more than 6% higher than the readings from mid-April, even as the BTC price wobbled inside the $57,000-$58,550 price range.
CME Bitcoin Futures open interest. Source: ByBt.com
Traders often use OI as an indicator to confirm trends in both derivatives and spot markets. For example, a rising number of outstanding derivatives contracts gets interpreted as new money coming into the market, irrespective of the bias.
Meanwhile, in the case of Bitcoin, a rising open interest in the futures market appears indicative of accredited investors’ wanting to increase exposure to BTC.
The latest OI readings suggest that more institutional capital is entering the Bitcoin market. As a result, investors have been looking more confident in opening new positions in the $50,000-$58,000 price range, with the CME volumes trending higher in the past seven days.
Bitcoin futures — volume and open interest. Source: CME
Analysts see a uniform rise across OI, volume, and price as signs of new buying in the futures market. That also puts the underlying asset in a better position to continue its uptrend. So it seems, Bitcoin is undergoing a similar upside trend.
Prime evidence for a bullish Bitcoin comes from the Commodity Futures Trading Commission’s record released on Oct. 5. It notes that the commercial sector — which comprises corporate hedgers — have accelerated their Bitcoin Futures purchases; they now hold a net position of more than 10,000 BTC.
At the same time, however, hedge funds and retail investors have emerged to be net short in the Bitcoin Futures market. Nevertheless, that could be their tactic to offset long positions elsewhere, such as in the spot market.
That is primarily due to a higher annualized premium available on CME Bitcoin Futures prices over spot markets. In recent days, CME Bitcoin futures price has been regularly trading 15% above BTC spot price, compared with around 7.7% on average in the first nine months of 2021.
Bitcoin Futures premium against spot prices. Source: Skew
Macro fundamentals behind Bitcoin resurgence
The latest bout of buying in the Bitcoin spot market also appeared in the wake of statements coming from U.S. regulators.
For instance, Gary Gensler, the chairman of the Securities and Exchange Commission (SEC), and Jerome Powell, the chairman of the Federal Reserve, discouraged a ban on Bitcoin. Meanwhile, the increasing prospect of a Bitcoin ETF approval by the SEC has also fueled the “buy the rumor” narrative.
Related: Bitcoin analyst ‘highly doubts’ return to $50K — Will the weekly close spark a correction?
Investors also sought exposure in the Bitcoin market as consumer prices continued to soar in the U.S. According to the Labor Department, the Consumer Price Index (CPI) rose to 5.4% year-over-year in September for the first time in thirteen years.
Inflation came in at 5.4% for September, which is a 13 year high.
Bitcoin just crossed over $58,000 which is the highest price since May of this year.
Bitcoin continues to serve as the best inflation hedge in the world.
— Pomp (@APompliano) October 14, 2021
JP Morgan Chase noted in its recent report that higher inflation prompted institutional investors to seek exposure in Bitcoin, with some even seeing the cryptocurrency as a better haven asset than gold. In another report published in Jan 2021, the U.S. banking giant had anticipated the BTC price to reach $140,000 in the long term.
“A crowding out of gold as an ‘alternative’ currency implies big upside for Bitcoin over the long term,” it had noted.
“A convergence in volatilities between Bitcoin and gold is unlikely to happen quickly and is in our mind a multiyear process. This implies that the above-$146,000 theoretical Bitcoin price target should be considered as a long-term target, and thus an unsustainable price target for this year.”
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.
