For a while now, banking royalty has treated bitcoin like a nephew going through some unfortunate phase –rather than directly confronted with its bullshit, better to be ignore and, if necessary, placate the thing until it goes away. Sure, blockchain is compelling enough to throw some venture money at just in case, but the actual bitcoin – the currency/commodity/token/what-have-you – well, best to just let it do its thing off in the financial hinterlands and focus on what matters.
We saw this outlook in action when, a couple of years ago, Jamie Dimon unloaded at some poor bitcoin enthusiast at a conference: “It's just not gonna happen. You're wasting your time ... There will be no real non-[state]-controlled currency in the world.” He suggested that the technology might be worthwhile, but that regulation would eventually strangle the monetary asset.
In the subsequent years – and despite regulatory advances – bitcoin has not gone away. In fact, Bank of America Merrill Lynch's most recent fund manager survey had long-bitcoin as the most crowded trade. So on Tuesday Dimon decided to crack his knuckles, take off his belt and blow off a little steam on the poor cryptocurrency:
“Bitcoin will eventually blow up. It’s a fraud. It’s worse than tulip bulbs and won’t end well,” Dimon said. Dimon also said he would fire any trader trading bitcoin for being “stupid.”
For most asset classes, it's bad news when the CEO of the largest bank in the country makes an unfavorable comparison between said asset and what is basically the canonical example of speculative excess and rampant fraud. Moreover, Jamie has a knack for making decent calls. For example:
But bitcoin is not like most asset classes. The speculative excess and rampant fraud that Jamie correctly identifies are part of what makes bitcoin great. This kind of blunt criticism is indeed new coming from someone as high up in the financial pecking order as Jamie Dimon, but it's hardly a fresh perspective.
Instead, the ultimate effect of Dimon's comments will likely be moot. Aggrieved diehards have rushed to buy the dip and will continue to do so. Fanatics will write blog posts and reddit comments explaining how Dimon's criticism proves that the old guard just doesn't get it. It will go back up, because that's what bitcoin does.