These days it came to light that JP Morgan was preparing to launch a new product structured with #bitcoin for its institutional clients, which will generate significant benefits if Bitcoin has a bullish rally in 2028, under certain established conditions and protections. Generally speaking, JP Morgan benefits from a super bullish 2026 and a super bearish 2028. Why? Let's explore.
As this new product is known, it is focused on a fixed price from #etf for cash of #blackRock (IBIT), which closely follows the behavior of Bitcoin's price. See the graph.
Bitcoin is currently at a 'low' price and there are not many positive catalysts (for now) that can drive the price up in the short term.
Eric Balchunas, Bloomberg analyst, broke down the conditions that this new product will have #JPMorgan .
Under these conditions, we can say the following:
If in one year (2026) the fixed price of IBIT is the same or higher, the investor only earns 16% fixed return, if the fixed price of IBIT goes higher than that, it doesn't matter, the investor only keeps that return. That is why it is advantageous for JP Morgan that it rises more than that fixed return.
If IBIT falls below the fixed price in 2026, it forces its investors to 'hold' (keep it) until 2028, where new conditions are activated.
If in 2028 IBIT exceeds the target price, investors receive 1.5 times what they invested, that is, if IBIT rises 10% from the target price, the investor generates 15% return. This scenario is not very favorable for JP Morgan because it will have to disburse those returns.
If the target price of IBIT falls, but not more than 30%, investors receive their initial investment without returns. This is what is called 'investor protection'.
Now if the target price of IBIT falls more than 30%, investors lose the same amount it has dropped. For example, if IBIT falls 50%, investors only receive the other 50% of their investment. This scenario is favorable for JP Morgan because it will not have to pay any type of return.
That is why I believe that the decision to launch this new product just when Bitcoin and IBIT are at these prices is not pure coincidence, right?
It is most likely that in this Bitcoin drop, JP Morgan has increased its position in IBIT (super discount), to hedge (reduce risks) and take some profits. It could also mean a strategic pause to forecast what the future path of Bitcoin might be in the coming years and set its target price for IBIT.
Does JP Morgan think Bitcoin will rise in 2026, but fall in 2028? A new cycle is in sight.
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