JPMorgan "Bitcoin (BTC), Strategy sell-off is not the problem"...What's the real issue?

▲ Bitcoin (BTC)

JPMorgan has diagnosed that the real long-term risk to Bitcoin (BTC) is not a massive sell-off by Strategy, but rather Wall Street's trend of shunning public blockchains. It warned that if banks and large financial institutions move to their own permissioned blockchains, the institutional financial market's position for Bitcoin and Ethereum (ETH) could narrow.

According to the cryptocurrency media outlet Coingape on July 10 (local time), an analysis team led by JPMorgan analyst Nikolaos Panigirtzoglou evaluated that Strategy's Bitcoin sales could create periodic selling pressure but are not a core structural risk. Strategy currently holds about 4% of the circulating Bitcoin. The analysis team stated, "Strategy is not the main structural threat to Bitcoin."

As Strategy recently formalized its Bitcoin monetization program, the impact of the company's large holdings on the market has also become a subject of debate. JPMorgan acknowledged that large holders' sales could shake market sentiment and liquidity, but placed greater emphasis on the trend of traditional finance adopting related technologies outside of public blockchains.

JPMorgan presented its own blockchain platform, Kinexys, as a representative example. Kinexys, which supports fund transfers for institutional clients, has surpassed $4 trillion in cumulative transaction volume. The analysis team analyzed that permissioned networks with identity verification, privacy protection, governance, legal responsibility, and regulatory clarity are more attractive to regulated financial institutions. It also suggested that if tokenized deposits become widespread, the role of public blockchain-based stablecoins in the institutional payment and settlement market could diminish.

The real-world asset tokenization market, worth approximately $50 billion, was also cited as a variable. JPMorgan raised the possibility that the current use of Ethereum might remain an "early experiment" rather than a permanent financial model. It analyzed that if the US cryptocurrency market structure bill passes this year, digital asset rules could become clearer, but banks' issuance of tokenized deposits could also accelerate.

JPMorgan predicted that permissioned networks would become the core foundation of regulated finance, while public blockchains could be used for distribution, limited transactions, and network connectivity. However, it also presented the possibility that public and permissioned blockchains could grow together, or that the stablecoin market could expand under clear regulations, and Bitcoin could continue to be traded as a digital gold-centric asset.

[Article Key Summary]

-JPMorgan pointed to the proliferation of permissioned blockchains as a greater long-term structural risk than Strategy's Bitcoin sales.

-Kinexys, with over $4 trillion in cumulative transaction volume, was presented as an example showing the trend of financial institutions adopting their own blockchains.

-It was evaluated that the use of Ethereum in the real-world asset tokenization market, worth approximately $50 billion, might still be in the early experimental stage.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*