JP Morgan buys Bitcoin while Jamie Diamond trashes it

JP Morgan CEO, Jamie Diamond, was out this week trashing Bitcoin and spruiking the risk of regulators cracking down on the digital currency. Imagine my surprise to find that at the very same time, Traders at JP Morgan were buying up millions of $$ worth of Bitcoin when the price dropped on the back of Diamond’s comments. 

Here’s the trading log from Nordnet Bank:

jp morgan trading data bitcoin
Trading records from Nordnet Bank

Are you surprised?

Of course you’re not. Who would be? The fact is that in recent months there haven’t been enough sellers of Bitcoin to allow institutions as large as JP Morgan to take substantive positions in the world’s largest cryptocurrency. It wasn’t so much that they needed the price to go down, what they needed was a major selloff of crypto assets so they could swoop in and buy up on the back to the fear. And it largely worked. Traders at JP Morgan were buying up coins and tokens long before Diamond’s comments. But the comments themselves accelerated the selloff that was triggered when Bitcoin broke through $5,000 USD earlier this year and continued after news that China would ban ICOs and then this week closed Bitcoin Exchanges around the country.

Who warned us about institutional buying?

There was plenty of speculation online about what Diamond’s  comments would do to Bitcoin. When you combine his remarks with the action of the Chinese government this week, it was easy to see why so many smaller investors sold their Bitcoin positions. The only real voice urging calm this week was Simon Dixon of Bank to the Future. 

Here’s a great line he gave us from his recent interview covering the Chinese exchanges. But it’s equally applicable to the panic that Diamond (deliberately?) set off. 

My guess is the wise institutions will be using this fear to accumulate into the retail selling volume of people panicking. And I think there will be a lot of institutional buying here as the ideal way to go your hands on some Bitcoins. It will be a race for the cheap ones.