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The Curious Case of J.P. Morgan Chase

Even though the blockchain and cryptocurrency markets bring global economies closer and are working their way to drive trust and security into many different industries, they still come with certain drawbacks. Because the markets are relatively new and small, they are understandably very volatile. Given all that, the cryptocurrency markets are an ideal target for price manipulation, which can happen in many ways – be it through Pump and Dump groups, fake sell and buy walls, dark pools or by sheer news manipulation.

In the last couple of years, there have been numerous cases where fake news and misinformation have caused massive price fluctuations, which in turn brought some investors big gains, but others major losses. Among these, one case stands out from the rest. It is the case involving Bitcoin (and blockchain technology in general) and the global banking giant J.P. Morgan Chase. This particular case is interesting due to the importance of the actors involved as well as due to the length of time it went on and the volatile price movements it caused.

The following is a short overview of the story which gives emphasis on market manipulation that caused the aforementioned Bitcoin price movements and provides some ideas on how cryptocurrency investors could have been protected by using the Blockbird platform.

Introducing Jamie Dimon

Jamie Dimon is an American business executive, who after a string of high profile banking jobs became the CEO and Chairman of J.P. Morgan Chase, the largest of the big four American banks. He has previously served on the board of directors of the Federal Reserve Bank of New York and has made Time magazine’s list of the world’s 100 most influential people in 2006, 2008, 2009 and 2011. Due to his massive salary and compensation package, which includes stock options in the bank, he is one of the few bank chief executives to become a billionaire. It’s safe to say that Mr. Dimon has considerable influence in the world of business and finance and that he is heavily invested in the success of J.P. Morgan Chase.

The Bitcoin Comments

Our story goes as far back as 2014 and 2015, when Mr. Dimon first started commenting on Bitcoin and digital currencies in general. At the time he dismissed Bitcoin’s potential to survive in the long-term and even went as far as to say that people were wasting their time with digital currencies. It was his opinion that no real, non-controlled currency could exist in the world.

When in November 2015, Jamie Dimon famously stated that “Bitcoin will not survive”, the mainstream as well as crypto media immediately started writing about it, with most outlets publishing the news on November 5th. At the time, the price of Bitcoin fell from approximately $490 on November 4th to as low as about $355 on November 6th. We cannot say for certain that the dip was caused entirely by his words, but the comments certainly had an effect.

Mr. Dimon attacked Bitcoin again in September 2017. On the 12th of September at a Barclays conference he attended, Mr. Dimon stated that he thinks the cryptocurrency is a “fraud” and “not a real thing,” declaring that the open-source protocol would eventually “close.” He even went as far as to warn his employees that if they were caught trading Bitcoin, they would be fired “in a second” for their “stupidity.” After his comments, the price of Bitcoin dropped sharply in the next couple of days, hitting a low of $2,970 on the 15th of September, even if it was trading well above $4,000 just the day before.

A Contradiction?

It is at that point that things got suspicious. Reports started coming out that immediately after the price of Bitcoin fell, J.P. Morgan started purchasing roughly €3 million worth of XBT shares, otherwise known as exchange-traded-notes, that track the price of Bitcoin. Out of all the major banking companies such as Goldman Sachs and Barclays, the J.P. Morgan’s team of buyers even purchased the most XBT notes. The notes are a popular investment vehicle for mainstream investors and financial management firms who want exposure to Bitcoin, letting clients hold the cryptocurrency without worrying about how to store it securely. This meant that Mr. Dimon’s company was trading Bitcoin-based notes right after his comments could have directly influenced their price.

His team bought 19,102 bitcoin shares in the Swedish Nasdaq traded Bitcoin ETN, translating to around 95 Bitcoins, worth some half a million dollars. They later sold around 9,000 shares, translating to some 40 Bitcoins, and seemingly kept the rest. Of course at that point the price already rose.

It’s Not Over Yet

Then, on October 13th that same year, just a day after vowing not to talk about Bitcoin again, Dimon stated that if people are “stupid enough to buy it,” they will pay the price for it in the future. “The only value of Bitcoin is what the other guy will pay for it,” he said. At the time, the price of Bitcoin hit a record of about $5,800 and even though it did not fall considerably in the next few days, it still took a light blow and most importantly, stopped rising.

It didn’t take long for new reports about J.P. Morgan’s crypto ventures to start. Despite Dimon’s criticism on the viability of Bitcoin as an investment, the bank started looking at the possibility of its clients to trade Bitcoin futures. It focused mostly on whether to provide them access to CME’s Bitcoin product through its futures-brokerage unit. At that point, the cryptocurrency price already surpassed the $8,000 level.

The Tide Turns

In 2018, Mr. Dimon had a change of heart, saying that he regretted his attacks on Bitcoin. Strangely enough, he became a believer in the cryptocurrency as well as the technology behind it. Soon after, J.P. Morgan Chase started steadily building their blockchain division and pushing headfirst into the crypto space, creating their own cryptocurrency called the JPM Coin.

The Blockbird Effect

It is still not clear whether Jamie Dimon used his power and influence to manipulate the cryptocurrency market and gain a competitive advantage for either himself, his company or its customers. But one thing is certain, his words had a massive effect on the prices of Bitcoin and most likely other currencies as well, resulting in people losing money or making bad investment decisions based on information that was simply not true.

By using the Blockbird platform, you could remedy such issues.

First of all, when the news reporting on Mr. Dimon’s words started being published, you would be the first to know. You could be alerted immediately by the platform’s push notifications that a piece of content was published that subsequently had a massive effect on the price of a certain cryptocurrency. You would know what the fluctuation is about and you would be prepared.

When you would open the platform, all the relevant news about this particular case would be recommended to you, neatly arranged and summarized, saving you the time (and possibly money) of searching for multiple sources, reading all the content scattered on the Internet, and checking for discrepancies in the story. At that moment, you would know that the price of Bitcoin was destabilized as a direct result of this piece of content. You would be ready.

Our Artificial Intelligence algorithms, combined and based on the knowledge of our community could even let you know whether a possibility exists that this piece of content is fake. At first, it would only be a percentage, based on previous news, source rating an other factors. But in time, who knows what the AI would be capable of?

The second time Mr. Dimon would make similar statements, the platform would help you even more. When the first reports started coming out, you would again get a notification. But this time, the platform wouldn’t just serve you a summary of the latest news, it would also show all the reports related to it. You would know his agenda and be prepared. Everything he said in the future would be marked, showing you just the type of person he is.

In the volatile cryptocurrency market, having the information, and having it first, makes all the difference. And with Blockbird, you would know more!

May 7, 2019, Nejc Horvat