The CEO of JP Morgan Jamie Dimon has recently described Bitcoin as a “fraud and Ponzi scheme”. In a recent interview with Bloomberg, he expressed skepticism about Bitcoin’s worth as a valuable currency, stating that the crypto asset lacks prospects.
Describing Bitcoin, he said,
“If you mean crypto like Bitcoin, I’ve always said it is a fraud. If they think they are a currency, there is no hope for it. It is a Ponzi scheme”.
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Dimon however acknowledged the value of Blockchain technology and smart contracts, lauding their potential applications. He noted that if a cryptocurrency can offer something useful like smart contracts, which hold inherent value, then blockchain technology has a purpose. He said, “To the extent, crypto is accessing certain blockchain things, that might have some value”.
It is interesting to note that this is not the first time Jamie Dimon has discredited the value of Bitcoin. The banker and businessman over the years has been open about his dislike for cryptocurrencies.
In a CNBC interview in January this year, Dimon described Bitcoin as a “pet rock” that does nothing. He said he did think Bitcoin did have some uses, noting that they just all happened to be illegal such as money laundering, fraud, tax avoidance, or as payment for sex trafficking.
Notably, during a Senate Banking Committee hearing in December 2023, he called the asset a “hyped-up fraud” and a “waste of time”, stating that if he were the government, he would close it down.
However, despite his reservations, Dimon recognizes the interest of his clients in cryptocurrencies. He has positioned the JP Morgan as an authorized participant in Blackrock’s spot Bitcoin exchange-traded fund (ETF)
Dimon emphasized the importance of supporting clients’ investment choices, highlighting a distinction between his personal views and professional responsibilities.
In June 2023, the bank launched euro-denominated transactions with its blockchain-based JPM Coin. The JPM Coin is typically used by large multinationals to transfer funds to and from their J.P. Morgan accounts or to make payments to other bank customers, per the report. Its benefits include payments that operate around the clock, payments that are executed more quickly than traditional transactions, and the ability to initiate payments that are not yet due, according to the report.
The debut of JPM Coin, which unlike bitcoin is equivalent to the US dollar, highlights the potential long-term threat blockchain poses to traditional financial players. The speed and security offered by blockchain make the payment space ripe for dramatic disruption.
Other major financial firms like BlackRock and Goldman Sachs had similar positions against Bitcoin like JP Morgan, before changing their minds as crypto became more popular and lucrative.
Recently, following the completion of Bitcoin’s fourth halving, JP Morgan has predicted that the price of Bitcoin will drop after the halving event.
The bank analysis of open interest in Bitcoin futures shows that the cryptocurrency is still considered overbought. JP Morgan wrote via a research report, “The price of Bitcoin is likely to weaken after the reward halving, a quadrennial event that slows the rate of growth in Bitcoin supply”.
Also, investment banking giant Goldman Sachs, has cautioned its clients from reading too much into the past halving cycles, given the respective prevailing macro conditions.