JP Morgan for Bitcoin: Volatility decline opens the door for bank investments

Recent reduction in bitcoin fluctuations could boost banks’ interest, according to JPMorgan.


The first signs of a normalisation of bitcoin volatility are encouraging,” bank analysts said in a report.


Cryptocurrency volatility in the last quarter fell to 85% after rising above 90% in February, according to analysts, while the corresponding index for the first half seems to stabilise at around 73%. As volatility declines, more banks may become keener on cryptocurrencies.


The price variations of bitcoin have kept many banks away from it, as volatility is a key factor in risk management – the greater the volatility of an asset, the greater the capital they must hold.


None of the major US banks now provide direct access to bitcoin and other cryptocurrencies. However, traditional Wall Street companies have shown more interest in digital currency, especially after doubling its price this year following its 300% increase in 2020.


Goldman Sachs announced this week that it is close to offering investment vehicles for bitcoin and other digital currencies to its wealthy customers. Morgan Stanley plans to give its wealthy clients access to three funds that will allow them to hold cryptocurrencies, and Bank of New York Mellon is developing a platform for traditional and digital assets.