Bitcoin rallied in tandem with gold as they are both viewed as hedges to a catastrophic scenario, the report said.

Despite recent regulatory headwinds, the cryptocurrency market has rallied strongly over the last month, with bitcoin (BTC) outperforming, JPMorgan (JPM) said in a research report last week.

The bank notes that bitcoin, the largest cryptocurrency by market cap, gained at the same time as gold as both are viewed as hedges to a “catastrophic scenario.”

Recent problems in the banking sector also “exposed the weaknesses of the traditional financial system given bank’s maturity mismatch is susceptible to bank runs,” analysts led by Nikolaos Panigirtzoglou wrote.

“The U.S. banking crisis and the intense shift in U.S. bank deposits to U.S. money market funds is viewed by crypto supporters as a vindication of the crypto ecosystem,” the report said.

Bitcoin has also benefited from the launch two months ago of bitcoin ordinals, which some argue will drive up transaction fees and increase miners’s revenues, the note said.

JPMorgan says the most important support for bitcoin has come from rising investor focus about next year’s halving event, scheduled for April 2024, when mining rewards are cut in half.

This would mechanically double bitcoin’s production cost to around $40,000, creating a positive psychological effect,” because historically, BTC’s production cost has acted as an effective lower boundary to its price, the report added.

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Shah joins Pantera after 12 years at JPMorgan spanning roles in sales, strategy and digital.

Samir Shah, formerly JPMorgan’s head of asset management sales, has left the bank to take up the position of chief operating officer at cryptocurrency-focused investment firm Pantera Capital.

Shah said that after “12 fantastic years with JPMorgan,” spanning roles in sales, strategy and digital, it was time to start a new professional chapter, via a LinkedIn post.

“As for my next step, I am thrilled to share that I will be joining Pantera Capital as Chief Operating Officer. Pantera is one of the industry’s leading investors in blockchain technology, and I’m excited to partner with Dan Morehead, Joey Krug and the broader Pantera team to help take the organization to new heights!” Shah said in his post.

Shah follows a well-trodden path from Wall Street into crypto. At the beginning of May this year, long-time crypto and blockchain lead at JPMorgan, Christine Moy, left the bank to become head of digital assets at private equity firm Apollo Global Management.

In early April, Pantera announced plans to close a blockchain fund with about $1.3 billion in committed capital.

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The French bank will use the Onyx network for short-term fixed income trading.

French banking giant BNP Paribas (EPA) has joined JPMorgan’s (JPM) blockchain-based network for fixed income market trading, according to a report by the Financial Times.

The Onyx Digital Assets network uses tokens for short-term trading in fixed income markets, enabling investors to lend out assets for as little as a few hours without them actually leaving their balance sheets.

Three quarters of deals on the repurchase – or “repo” – market are backed by government bonds, meaning it is one of the most important sources of collateral for banks to fund their balance sheets.

Goldman Sachs (GS) has also previously tapped JPMorgan’s network for repo trading.

Some $300 billion of intraday repo deals have been conducted on the Onyx network since its launch in 2020.

JPMorgan and BNP Paribas were not available for comment at press time.

“We see this as part of our efforts to utilise the technology for the whole trading and operations lifecycle as the market evolves,” Joe Bonnaud, global markets chief operating officer for BNP Paribas said, in the report published on Monday.

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The Wall Street bank has opened a lounge in blockchain-based Decentraland.

JPMorgan, the largest bank in the U.S., said it has become the first lender to arrive in the metaverse, having opened a lounge in Decentraland, a virtual world based on blockchain technology.

As well as the unveiling of the Onyx lounge (the name refers to the bank’s suite of permissioned Ethereum-based services), JPMorgan also released a paper exploring how businesses can find opportunities in the metaverse.

“There is a lot of client interest to learn more about the metaverse,” Christine Moy, JPMorgan’s head of crypto and the metaverse, said in an email. “We put together our white paper to help clients cut through the noise and highlight what the current reality is, and what needs to be built next in technology, commercial infrastructure, privacy/identity and workforce, in order to maximize the full potential of our lives in the metaverse.”

With the mainstream acceptance of things like non-fungible tokens (NFT), the past year has seen a breathless advance into the metaverse, a catch-all for immersive gaming, world-building and entertainment, fueled by integrated commerce applications. In January, electronics giant Samsung opened a version of its New York store in Decentraland, and in November Barbados established a metaverse embassy, also in Decentraland.

JPMorgan begins its assessment of “metanomics” by pointing out that the average price of a parcel of virtual land doubled in the latter half of 2021, jumping from $6,000 in June to $12,000 by December across the four main Web 3 metaverse sites: Decentraland, The Sandbox, Somnium Space and Cryptovoxels.

“In time, the virtual real estate market could start seeing services much like in the physical world, including credit, mortgages and rental agreements,” said the JPMorgan report. It added that decentralized finance (DeFi) collateral management could well come into play, and that rather than traditional finance companies this could be done by decentralized autonomous organizations (DAO).

Work in the metaverse will also be gainful, said the report, pointing to a range of entertainment providers, as well as apps like RTFKT, a virtual shoe designer recently acquired by Nike. Another big spend will likely be on advertising, the bank said, citing a prediction that in-game ad spending is set to reach $18.41 billion by 2027.

The JPMorgan paper attempted to illustrate the metaverse hype versus the reality, stating that many areas need to improve. These include the overall user experience and performance of avatars, as well as commercial infrastructure.

“We believe the existing virtual gaming landscape (each virtual world with its own population, GDP, in-game currency and digital assets) has elements that parallel the existing global economy,” according to the bank report. “This is where our long-standing core competencies in cross-border payments, foreign exchange, financial assets creation, trading and safekeeping, in addition to our at-scale consumer foothold, can play a major role in the metaverse.”

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