Morgan Stanley, J.P. Morgan, Goldman Sachs: What They Think of Crypto
Main page Analytics, US Market, Crypto Market, Goldman Sachs, Cryptocurrency
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Nov. 1, 2018

Analytics are admitting the surprisingly low volatility index the first cryptocurrency has been showing for the last 60 days. The fluctuations of the main cryptocurrency fell to 2.07% and returned the investors’ attention. While traditional markets are suffering from stagnation, the largest banking institutions are turning to crypto, or at least to the blockchain. We decided to check what the U.S. market titans think and do regarding crypto.

Morgan Stanley: Bitcoin has become “institutional investment class”

According to a recently released report by Morgan Stanley dubbed “Bitcoin Decrypted: A Brief Teach-In and Implications,” the number of institutional investors in cryptocurrency is steadily growing, which cannot be said about retail investors.

The research department of banking holding studied the dynamics of bitcoin over the past six months and highlighted the main trends. The report, among other things, emphasizes the “Bitcoin/Crypto: Rapidly Morphing Thesis”: from recognizing bitcoin as “digital cash” and the appearance of full confidence in investors to the launch of new payment systems and the entry of institutional investors into the game.

The bitcoin ecosystem has experienced a lot: hard forks, hacks, volatility and the emergence of new technologies. The new thesis of Morgan Stanley research group states that BTC has become the “institutional investment class”, and the cryptocurrency has been one for almost a year. Since 2016, the volume of coins managed by hedge funds, venture, and private joint-stock companies has increased dramatically to $7.11 billion at the moment.

Touching the topic of stablecoins, which recently gave the reason to be discussed, Morgan Stanley report is admitting, that the rise of such coins became possible due to the lack of trading pairs directly with fiat.

“Trading crypto → fiat requires going through the banking sector which charges a higher fee. Also, as bitcoin prices fell, so did most of the other coins so if owners wanted to come out of bitcoin holdings, they needed to go to another asset which was closer to the valuation of the U.S. dollar,” states the report.

Researchers are also predicting the number of the existing digital fiat analogs to decrease, leaving space in the market only that has set “the lowest transaction costs, highest liquidity and defined regulatory structure which will all increase adoption.”

Meanwhile, a number of significant events have occurred in the cryptocurrency world: fidelity has created a cryptocurrency services department, large investments have been made in Seed CX, BitGo and Binance, and regulators around the world are becoming increasingly supportive of digital money.

Finally, Morgan Stanley after speaking with their clients identifies three main problems that cryptocurrency investors face and that are preventing them from entering the field:

  • Regulatory uncertainty.
  • The lack of regulated custodial services.
  • The lack of really large financial institutions and asset managers in the cryptocurrency sphere.

J.P. Morgan doesn’t “give a sh\t about bitcoin”

While Morgan Stanley is preparing big research on how institutional investors can enter the crypto market smoothly, the CEO of another bank J.P. Morgan Chaise stated that he doesn’t “give a sh*t about bitcoin.”

In his recent speech during the AXIOS conference held in LA, JP Morgan CEO Jamie Dimon said he never changed his mind regarding the bitcoin, but he was always sympathizing the blockchain technology that’s behind the first crypto.

“I never changed what I said, I just regret having said it. I didn’t want to be the spokesman against bitcoin. I don’t really give a sh*t, that’s the point, okay? The blockchain is real, it’s technology, but bitcoin is not the same as a fiat currency,” Dimon said.

Joseph Young, a well-known analyst, and cryptocurrency investor has pointed out, that the changes in JP Morgan CEO’s behavior regarding the bitcoin are an identificator, that the head of the banking actually pretty much cares about the bitcoin.

Goldman Sachs: “clients insist on investing in crypto”

At the same time, the news is coming from another banking giant Goldman Sachs. It’s in its plans to offer bitcoin derivatives to a limited client base. Moreover, it will create a custodian solution for storing cryptocurrencies but will abandon the idea of launching Ethereum derivative.

Closer to Crypto: Goldman Sachs Launches Bitcoin Derivatives

According to the source familiar with the matter, Goldman Sachs has attracted customers to test bitcoin derivatives, the technology of which is similar to cryptocurrency futures represented by the CBOE and CME exchanges. However, the product developed by the bank, unlike the listed sites, will not be traded on the stock exchange, since it is “non-deliverable”. The exact number of participants involved in testing is not reported.

Also, according to the source, the bank does not exclude the creation of a custodial service for the “cold” storage of digital currencies. Meanwhile, Goldman Sachs will not provide derivatives for Ethereum, since the instruments derived from this cryptocurrency are not represented on any regulated trading platform.

Goldman Sachs CFO: Crypto Desk Reports are False

Earlier, Business Insider referring to anonymous sources reported that the bank refused to launch crypto trading because of the uncertain position of financial regulators. However, soon representatives of Goldman Sachs denied a rumor. In particular, Goldman Sachs CFO Martin Chavez assured that the company is developing bitcoin derivatives, as it observes significant interest from customers.

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