For a long time, bitcoin (BTC) was viewed with skepticism and, in some cases, repudiation by banks and traditional financial institutions. However, in a turn of events, a wave of these actors have taken significant positions in the digital currency.

This week it came to light that some of the world's largest banks, such as JP Morgan, Royal Bank of Canada and Morgan Stanley, have invested millions of dollars in bitcoin. This was revealed in their latest quarterly reports, showing holdings in the digital currency ETFs launched this year in the United States.

This marks a notable change in the perception of the digital asset within the banking and financial sector, after years of showing distance from the market.

Six years ago, in 2018, the CEO of JP Morgan bank, Jamie Dimon, classified bitcoin as a “fraudulent scheme. ” 

 To state his thesis, he exclaimed that its only use cases involved “criminals, drug traffickers, money laundering, and tax evasion.” Over time, this theory was discredited with, for example, people using it to store value, trading, collect salaries or send remittances.

At that time, the CEO of the Royal Bank of Canada, David McKay, disagreed with the statements of the head of JP Morgan, mentioning that “I wouldn't call it fraud.” However, he also showed distance from the market, despite a nascent interest in investigating it.

“There are many elements of bitcoin that do not match our current perspective on what a monetary unit should do,” he said then on behalf of Royal Bank of Canada. And he clarified: “there are some real concerns about how bitcoin is used that we have to resolve.”

In contrast, the Morgan Stanley company published a report that year that identified bitcoin and cryptocurrencies as "a new class of institutional investment. " Even before, the leader of the bank had spoken positively about the market.

“Bitcoin is certainly more than a passing fad,” said James P. Gorman, CEO of Morgan Stanley, in 2017. 

He added then that he found the privacy it offers to hold and transfer money without intermediaries, or the possibility of confiscation. However, he assured that he had not purchased the currency at the moment, warning that his trade was "high speculation."

At that time, bitcoin was trading around USD 4,500, which is seen today as a "bargain" compared to its current price of USD 66,400+

Later in 2020, Morgan Stanley strategist Ruchir Sharma predicted good performance for bitcoin in the coming years. And he claimed there were reasons to think its rise had deep roots in low trust in the fiat system.

“Don't assume that your traditional currencies are the only stores of value or means of exchange that people will trust. Those familiar with the technology will continue to look for alternatives. And the option of regulating the cryptocurrency boom, which some governments are considering, can only accelerate this popular insurgency,” the strategist emphasized.

With such a vision, it is no coincidence that Morgan Stanley has become one of the institutional investors with the most exposure to bitcoin ETFs this year (USD 251 million), as seen below. This move reflects the strengthening of the bank's positive stance on the digital currency.

More cautiously, other banks also became more flexible in their view of the market as it matured. Even JP Morgan, in the same year that its CEO called bitcoin a fraudulent system, hired a head of cryptoasset strategies, according to close sources.

Since then, little by little, JP Morgan began to dive deeper into the market. By 2019, it called the “blockchain system” an “immature and overrated” technology. Although it did not rule out its potential growth, mentioning that it needed between 3 to 5 years of development to be able to revolutionize the global economy.

By January 2021, during the bitcoin bull market, JP Morgan analysts were already bullish, projecting the price of the currency above USD 146,000 in the long term. They then pointed out that this asset could displace gold as an alternative refuge of value.

Just two months later, the giant bank presented a proposal for an investment product in shares of companies in the cryptoasset industry, such as MicroStrategy and Riot Blockchain. That same year, the bank later revealed that 40% of investors surveyed said they had crypto assets, which explains their intention to enter the market.

Interestingly, on multiple occasions in 2024, JP Morgan analysts said that bitcoin was at overbought levels. “We do not expect price increases after the halving,” they warned, while it is now known that the company took a position in currency ETFs, evidently, with a long-term bullish outlook.

From skeptics to believers

The change in attitude towards bitcoin from these banks is due to several key factors. First, the market infrastructure has matured significantly, offering more liquidity and regulated options for investment.

The launch of bitcoin ETFs this year in the United States, in particular, has provided an accessible and regulated avenue for banks to participate in the market without having to deal with the complexities of direct custody.

Additionally, growing concerns about inflation and the search for safe haven assets have led many to view bitcoin as a store of digital value comparable to gold. This narrative has especially resonated in the uncertain economic environment, further driving its adoption.

Historically, banks have been considered enemies of BTC because its technology represents a direct threat to their traditional business model. Bitcoin enables direct transactions without intermediaries, reduces demand for traditional banking services and challenges centralized control of the money supply.

However, the growing adoption of bitcoin suggests that banks are gaining ground in this market to avoid being left out of innovation. In other words, you could say that they are following the famous saying: “if you can't beat your enemy, join him.”

Implications for the future

The entry of banks into the bitcoin market is a bullish signal for its price. As more institutional capital flows into the asset, demand can increase over supply, leading to a rise in price.

This trend of banking adoption may also drive greater acceptance by other investors, including retailers and other institutions that are still watching from the sidelines.

Additionally, the involvement of big names like JP Morgan and other financial giants may also help further legitimize bitcoin in the traditional financial arena.

This recognition could pave the way for deeper integration of bitcoin into conventional investment portfolios and financial products offered by banks.

Therefore, what began as a rebellious and disruptive technology for traditional finance is increasingly gaining attention and support from some of the biggest players in this sector. As bitcoin continues to “love” its former enemies, the global cryptoasset market appears to be preparing for a new era of growth and widespread acceptance.