JPMorgan To Launch Cryptocurrency Exposure Basket With 11 'Bitcoin Stocks' Including MicroStrategy And Square

JPMorgan Chase & Co. JPM is planning to launch a new product that will give investors exposure to cryptocurrency through eleven Bitcoin proxy stocks.

What Happened: According to a filing with the SEC, the new product is a debt instrument titled JPMorgan’s Cryptocurrency Exposure Basket (Mar 2021), which contains an “unequally weighted” basket of reference stocks that either own cryptocurrency or operate business linked to it.

The debt instrument allocates 20% to MicroStrategy Incorporated MSTR and 18% to Square Inc SQ – two companies that declared their Bitcoin investments early on.

Cryptocurrency mining company Riot Blockchain Inc RIOT and cryptocurrency mining chip manufacturer NVIDIA Corporation NVDA were also given a sizable allocation of 15% each.

Together these stocks make up about 68% of the Basket, noted the bank n in the prospectus. 

“We expect that generally the market value of your notes and your payment at maturity will depend to a greater extent on the performance of these four Reference Stocks.”

Other portfolio stocks included Paypal Holdings Inc PYPL, Advanced Micro Devices, Inc. AMD, and Silvergate Capital Corp SI.

Notably, Tesla Inc TSLA that holds over $1.5 billion worth of Bitcoin, is not on JPMorgan's list.

Why It Matters: A few weeks ago, strategists from JPMorgan endorsed a one percent allocation towards cryptocurrency in a note to clients.

The analysts said that such an allocation would serve as a hedge against inflation in traditional asset classes like stocks, bonds, and commodities.

Whether or not this was done as a precursor to launching more crypto-centric products, the underlying fact is that the Wall Street giant has officially made a U-turn on its previous stance on cryptocurrencies.

In 2017, JPMorgan CEO Jamie Dimon went on record to say that he would fire any trader that buys or sells Bitcoin in a second

Image: Dinozaurus via Wikipedia