JPMorgan Brings in MicroStrategy and Square for Crypto Exposure

According to the latest filing made by JPMorgan Chase with the US Securities and Exchange Commission (SEC), they have developed a new debit instrument that would provide its investors direct exposure to a basket of companies focused on cryptocurrency. Known as the Crypto Exposure Basket, the product itself was described in the filing as a basket of 11 Reference Stocks, which were unevenly weighted, and belonged to different companies listed in the United States. All of these businesses run their operations within the crypto space, whether directly or indirectly. As far as the exact details are concerned, the biggest chunk of the debt instrument i.e. 20% has been allocated to MicroStrategy, the data analytics firm. 

This doesn’t really come off as a surprise, considering the fact that the company has become quite famous for its substantial Bitcoin holdings. Its balance sheet indicates that it currently owns a whopping 91,064 BTC. Another major exposure involves Square, the crypto company founded by Twitter’s founder, Jack Dorsey, and 18% has been allocated to it. The third position is Riot Blockchain and 15% has been allocated to it. Both of these companies are also known to have significant exposure to Bitcoin. This basket also comprises Nvidia and PayPal, both of which boast an exposure of around 15% each. 

The CME Group, Advanced Micro Devices, Silvergate Capital, Overstock.com, Intercontinental Exchange, and Taiwan Semiconductor Company are some of the other big names included in the basket. The filing also provided details about the difference in the exposure percentages of the new Crypto Exposure Basket. It was classified by JPMorgan that the weight of the Reference Stock was partly based on the exposure to Bitcoin, along with some other factors including correlation to Bitcoin and liquidity as a whole. It was explained by JPMorgan that the basket of companies’ performance would determine the payouts of the new debt instrument.

The minimum investment to be made in this new product is fixed at $1,000 and May of 2022 is the specified maturation date. This product is another great example of how institutional investors can be part of the crypto market without actually having to take the risk of owning cryptocurrencies. At their worst, the crypto markets are absolute chaos, but if you catch them right, they can turn out to be highly profitable. As expected, Wall Street is more than ready to get a piece of this very lucrative and pricey pie, which also explains why Bitcoin is currently enjoying strong price support.

Not even a month ago, Bitcoin had suffered from a rather violent crash, but the leading cryptocurrency was once again back up and moved past the $50,000 mark. It is important to note that the more than 25% drop in Bitcoin’s price was dubbed as a ‘healthy correction’ by institutions and experts and they said that it had been expected. The cryptocurrency had broken its previous high in December of last year and had only climbed up since then, only to crash last month.