JPMorgan Launches Bitcoin Structured Note Offering 1.5x Returns With BlackRock’s IBIT

JPMorgan unveiled a new financial product—a leveraged structured note linked directly to BlackRock’s iShares Bitcoin Trust (IBIT). This announcement comes after intense scrutiny of the bank for allegedly targeting Strategy (formerly MicroStrategy), the Bitcoin proxy firm headed by Michael Saylor.

New IBIT-Linked Notes From JPMorgan

According to the bank’s filing with the US Securities and Exchange Commission (SEC), this structured note is strategically aligned with Bitcoin’s four-year Halving cycle, setting a maturity date for 2028. 

Investors who purchase these IBIT-linked notes can potentially realize returns through an auto-call process that activates after one year, or upon reaching the final maturity date in 2028, which coincides with the next Bitcoin Halving. 

Key features of this product include a guaranteed minimum fixed return of 16% if the IBIT exceeds certain price levels after a year. 

However, there is principal protection against declines of up to 30% in IBIT’s value, alongside capped maximum returns to maintain an appropriate risk-reward profile. Notably, if IBIT falls more than 30% from its initial levels, loss exposure is triggered.

This product launch reflects a renewed perspective on Bitcoin and digital assets from JPMorgan, despite CEO Jamie Dimon’s consistent skepticism regarding the cryptocurrency. 

Earlier in the week, the bank commented on the nature of crypto, suggesting it is shifting away from a venture capital-like ecosystem towards a more tradable macro asset class, supported by institutional liquidity rather than merely retail speculation. One analyst suggested that Bitcoin could reach $240,000 over the long term.

Expert Warns Of Risks In The Bank’s New Bitcoin Offering

Market expert Simon Dixon took to social media to express concerns about JPMorgan’s new offering, criticizing the product as a complex, asymmetric bet that allows JPMorgan to benefit while exposing individual investors to significant risks. 

According to Dixon, if Bitcoin were to drop by 40%, individual investors would bear the consequences, while the bank retains the benefits of liquidity and fees, positioning itself favorably in the market.

Amid these developments, reports from NewsBTC indicated that the bank had cautioned that Strategy might be removed from major equity indices, specifically the MSCI USA Index. 

Analysts at JPMorgan noted that the challenges facing Strategy extend beyond recent declines in cryptocurrency prices, which have seen Bitcoin fall over 30% from its all-time highs. 

If the anticipated MSCI decision takes place by January 15, it could trigger passive outflows estimated between $2.8 billion and $8.8 billion.

At the time of writing, Bitcoin was trading at $87,247. It has been consolidating between this level and $85,000 for the past few days, following the latest correction that saw the cryptocurrency retrace all the way down to $80,000 last Friday. 

Featured image from DALL-E, chart from TradingView.com