Speaking at a banking industry conference a few hours ago, J.P. Morgan Chase & Co. boss Jamie Dimon said “Bitcoin will eventually blow up. It’s a fraud. It’s worse than tulip bulbs and won’t end well…” He was referring to the Tulip Bubble of the 17th century, in which it is believed that tulip bulbs rose in value on Dutch markets from the equivalent of a few U.S. Dollars in today’s terms per bulb, to the value of a large house, before crashing to become almost worthless.
Some analysts see a parallel with Bitcoin and the other major Cryptocurrencies, which have more than doubled in value in just a few short months. Bitcoin has shown itself capable of rising and falling, in Dollar terms, by more than 25% in under 2 weeks. A few weeks ago, I examined the question of the “Bitcoin Bubble” myself.
Dimon might be right. It could be that the price of Bitcoin will fall by more than 90% and stay tat cheap, becoming a footnote in the history of 2017, and an example of how suckers get conned by investment frauds.
Yet there is something that sticks in my throat when I see the boss of a bank like JP Morgan call a free-floating decentralized currency a “fraud”. As one comedian put it today, “I forget whether it was Bitcoin or JP Morgan that was bailed out by the taxpayer”, referring to the crash of 2007-08. Dimon’s timing is also interesting: Bitcoin has just broken convincingly below a key support area near $4,000, and has now falling by more than 20% from its peak of 11 days ago, meeting the technical definition of a bear market. It is reasonable to conclude that Dimon feels threatened by Bitcoin and is trying to talk it down, by kicking it when it is down. “Bitcoin is not a real thing”, said Dimon, well you might ask, just what exactly is the U.S. Dollar? Backed by nothing, it can hardly be described as a “real thing”!
So, if we are going to consider “frauds”, let’s look at the history of JP Morgan itself. It wouldn’t still be here if over the years it hadn’t received massive financial assistance from the taxpayer. Do I need to say more than that?