$JPM, $BAC, Wall Street, Silicon Valley Join The Bitcoin Phenom

Posted by: : Paul EbelingPosted on: December 13, 2013 $JPM, $BAC, Wall Street, Silicon Valley Join The Bitcoin Phenom

$JPM, $BAC, Wall Street, Silicon Valley Join The Bitcoin Phenom

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Reports surfaced during this week that JPMorgan Chase (NYSE:JPM)  has been pursuing the development of a cryptocurrency for at least 14 yrs.

In a recent analysis for clients, Bank of America Merrill Lynch (NYSE:BAC) called Bitcoin a potential “major means of payment for e-Commerce and may emerge as a serious competitor to traditional money transfer providers.”

Now Fidelity is reportedly allowing clients to put Bitcoins in their 401(k) plans, adding a little risk to the retirement picture, according to financial website MarketWatch.

Bitcoin, the cryptocurrency created by online “miners” who solve complex math problems, is now gaining as much acceptance as skepticism.

The digital currency alternative has been a favorite target of speculators, who pushed the price as high as 1,240 early in December, and as low as 365  a month ago. It traded around 850 mid-day Thursday, according to the Mt.Gox exchange.

Along with wild price fluctuations has come intensified interest.

“Bitcoin is the 1st to market with this concept,” banking analyst Dick Bove at Rafferty Capital Markets said in a note to clients. “It is not the last and there will be other more refined approaches, but make no mistake one or many digital currencies, which are not controlled by governments, are coming.”

Mr. Bove believes the success of Bitcoin will hinge on its ability to weed speculators out of the cryptocurrency market.

Price stability, even at lower levels, will help it project a higher caliber of legitimacy, he said.

Meantime, should JPMorgan’s patent application get approval, that could be a game-changer for the virtual currency world.

“We suggest that investors, particularly those in banking, must stay aware of developments in this market,” Mr. Bove said. “It will be a factor in valuing certain banking products related to the payment system.”

Bitcoin Foundation announced Thursday that it has opened chapters in Canada and Australia.

The advocacy organization said it seeks “to build a collaborative and supportive relationship to address unique issues and priorities through localized leadership.”

In addition to Wall Street, Silicon Valley also is getting geared up over bitcoin.

Coinbase, a San Francisco company, has raised $25-M in venture capital money as it seeks to expand. The company helps facilitate bitcoin transactions between buyers and vendors that accept the currency.

Various other funds have been raising significant amounts as well, with SecondMarket reporting earlier this week that it was holding $65-M worth of Bitcoins.

Cameron and Tyler Winklevoss are perhaps the most recognized names involved in supporting Bitcoin, with their Winklevoss Bitcoin Trust.

Bank of America Merrill Lynch analysts believe that Bitcoin’s big advantage is early entrance to a market that is likely to grow. Criticism of Bitcoin as an allure to criminals looking to conduct illegal transactions is largely unwarranted, BofA said, because of the ease in tracking usage.

On the downside, BofA rates strategist David Woo believes the continued price volatility and likelihood of regulation in the future cloud Bitcoin’s chances for success.

This is an ongoing story, stay tuned…

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Paul Ebeling

 

 

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Paul Ebeling

Pattern Recognition Analyst, equities, commodities, forex
Paul Ebeling is best known for his work as writer and publisher of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly-regarded, weekly financial market letter, where he enjoys an international audience among opinion makers, business leaders, and respected organizations. Something of a pioneer in online stock market and commodities discussion and analysis, Ebeling has been online since 1994. He has studied and worked in the global financial and stock markets since 1984.
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