Digital assets: bear market would be bitcoin’s acid test

Digital assets: bear market would be bitcoin’s acid test

Bitcoin has received no validation stronger for diehard fans than Jamie Dimon calling it “worthless”. JPMorgan, which he runs, is exactly the kind of dominant, regulated institution cryptocurrencies are intended to disrupt.

“He keeps commenting on cryptos”, says Oleg Giberstein, a London crypto entrepreneur, “but the market is proving him wrong”. Bitcoin jumped to around $60,000 last week, close to historic highs, anticipating long-awaited exchange-traded fund launches.

The combined value of cryptos monitored by the CoinGecko website rose to $2.5tn, around five times the market worth of JPMorgan. Despite Dimon’s broadsides, his bank gave wealth management clients access to cryptocurrency funds this summer.

Lex will examine digital assets in a daily note this week because they are edging into the financial mainstream. Giberstein’s comment is only half-right, however. The popularity of cryptos is nudging some regulated institutions into providing dealing services. But a real market test will only come with a prolonged downturn.

This column’s position on bitcoin is that its utility is limited to secrecy (some of it illegal), dissent (some of it justified) and speculation (it is always with us). In the latter guise, bitcoin is a good barometer of exuberance precisely because it is a clumsy transactional medium.

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