Bitcoin jumps to a 3-year high after JPMorgan joined Adoption Wave


Bitcoin catches up to its highest close in nearly 3 years when JPMorgan joins the Crypto Club

Jamie Dimon was a major player in the Federal Reserve and runs two of the largest banks in the country. He is now the last to jump on the cryptocurrency bandwagon.

CNBC reported this morning that Dimon’s bank, JPMorgan Chase (JPM), has begun using its digital currency for commercial transactions. The announcement follows more than a year of product development, known as JPM Coin. Executives see the launch as a sign that blockchain technologies are finally going mainstream.

JPM is not alone. This month has seen a broadening trend in “cryptocurrency adoption” as established and large companies enter the space. It is taking Bitcoin (BTCUSD) to its highest levels in over a year, even as the broader stock market retreats.

Big Bitcoin Buy by Square

The current wave of adoption began on October 8 when Square (SQ) bought $ 50 million in BTCUSD. It represented approximately 1% of the total assets of the payment company.

“Bitcoin has the potential to be a more ubiquitous currency in the future,” SQ said in a statement at the time. “As it grows in adoption, we intend to learn and participate in a disciplined manner.”

The move represents a deeper move in cryptocurrencies by SQ, which allowed users to buy BTCUSD on its Cash app in 2018. It also fueled the biggest rally in BTCUSD since early August.

Bitcoin (BTCUSD), daily chart, comparing 2019 price action with 2020.
Bitcoin (BTCUSD), daily chart, comparing 2019 price action with 2020.

Chinese digital yuan

The next catalyst was China’s early implementation of a digital yuan. This would be different from decentralized cryptocurrencies like BTCUSD and Ethereum (ETHUSD) because it is managed by a central bank. But it’s similar because it uses a database to track ownership of money. Proponents think it may be easier and cheaper than relying on banks and clearing houses for payments.

The Shenzen government donated approximately $ 1.5 million of the new currency to promote the initiative and encourage participation. There have been more incremental steps, including changes to banking laws to support the effort. Alipay, owned by Alibaba’s Ant Group (BABA), is also a big player.

PayPal embraces Bitcoin

The other big event took place last Wednesday, October 21st. That’s when PayPal (PYPL) enabled the buying and selling of cryptocurrencies such as BTCUSD and ETHUSD. It could potentially expand the universe of users because PYPL has around 346 million active users. This means that fewer than 0.10 coins will ever be available for each of them, given its limited supply of 21 million.

The current wave of adoption follows Bitcoin’s halving event in May, which reduces the supply of new coins. It also comes after the rise of decentralized finance and the potential catalyst of the big Ethereum upgrade. (This could also reduce supply, as we’ll cover in a future post.) Finally, major money managers like Paul Tudor Jones and Michael Novogratz have recently approved cryptocurrencies, especially with low interest rates.

In conclusion, BTCUSD has just had its highest weekly close since the week ending January 13, 2018, when its last bullish run was ending. Today it is on pace for its highest daily close from around the same time. Traders may want to see this as this dramatic year draws to a close.


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