The price of Bitcoin has been on a rollercoaster ride over the past year. After reaching an all-time high of nearly $70,000 per Bitcoin in November 2021, the price plummeted to less than half just a few months later. Now, in late 2022, the price has recovered to over $40,000.
Behind these price swings lies an intense power struggle between major financial institutions, government regulators, and early cryptocurrency adopters. Each side is attempting to control the narrative around Bitcoin and crypto to benefit themselves.
On one side, financial giants like BlackRock and Morgan Stanley want to offer Bitcoin exchange-traded funds (ETFs) to their institutional clients. This would allow these investment funds to accumulate large amounts of Bitcoin without having to deal with the complexities of custodying it themselves.
On the other side stand vocal critics like Senator Elizabeth Warren, who sees Bitcoin primarily as a vehicle for illegal activities that should be heavily regulated or even banned altogether.
And in the middle of these two polar opposites are crypto innovators who believe Bitcoin and underlying blockchain technology can enable a fairer, more inclusive financial system for all.
Act 1: Jamie Dimon Lashes Out Against Bitcoin
A prime example of this power play theatre took place in early December, when JPMorgan Chase CEO Jamie Dimon fiercely criticized Bitcoin during a US Congressional hearing.
Dimon claimed Bitcoin is often used for illegal activities and should be regulated even more strictly than tobacco or firearms. This is not the first time the banking executive has attacked cryptocurrencies – in fact, in the past he has threatened to "fire" any employees "stupid enough to trade Bitcoin."
Yet at the same time, JPMorgan acts as the lead bank providing services to Coinbase, the largest US cryptocurrency exchange. Isn’t this a glaring contradiction? Why does Dimon allow his bank to work with a company he supposedly renounces so strongly in public?
The reason appears obvious: the lucrative fee business. Despite his explosive public statements, privately the major banks like JPMorgan are eager to get their piece of the crypto pie. They just don’t want to openly admit it to avoid regulatory wrath.
Act 2: Google Sets the Stage
Another interesting development happened around the same time as Dimon’s public anti-Bitcoin diatribe. Google – yes, the tech giant – quietly updated its advertising policies to allow paid ads for cryptocurrency investment funds starting January 2024.
Is it a coincidence this date lines up exactly with the deadline given to the SEC, the US securities regulator, to approve or reject several pending Bitcoin ETF applications? It appears not.
Industry experts believe the SEC will finally approve these controversial Bitcoin ETFs next year, opening the floodgates to a wave of institutional money into crypto. And Google wants to make sure it’s prepared to reap the advertising rewards.
Again, the tech giant's actions seem to contradict its public statements. Sundar Pichai, Google’s CEO, stated at a recent conference the company remains “skeptical” about crypto and blockchain. Yet privately, they are paving the road to capitalize when big finance jumps in feet first.
Closing Thoughts
Institutional money anxiously awaits in the wings to flood the Bitcoin and liquid crypto markets. But they are playing an elaborate game of chess to manipulate regulators and protect their own interests.
The recent public explosions against Bitcoin from the CEOs of JPMorgan and Google appear aimed at keeping regulators at bay, at least temporarily. Meanwhile, they are quietly building the necessary infrastructure to profit from crypto when the time is right.
Crypto innovators, for their part, must carefully navigate this minefield. They need to avoid excessive regulation that kills innovation, while bringing major institutions on board to enable mainstream adoption.
There are surely many more acts left to play out in this power theatre surrounding Bitcoin and cryptocurrencies. It’s impossible to predict exactly how this drama will unfold. But one thing’s for certain – greed and vested interests abound behind the scenes.
Image owned and created by me.
