A new debt instrument has now been developed by JPMorgan Chase. This instrument allows investors to gain direct exposure to a basket of various crypto-focused companies, as stipulated within the latest filing with the US Securities and Exchange Commission, or SEC
Going Into Crypto Institution-Style
The product itself, dubbed the Crypto Exposure Basket was described in the filing as a basket of 11 Reference Stocks of various US-listed companies, all of which unevenly weighted. These businesses all operate their business with cryptocurrencies, be it directly or indirectly.
As for the exact details, 20% of the instrument, the biggest chunk of it, has been allocated to the data analytics firm, Microstrategy. That’s not really a surprise, seeing as the firm is quite famous for its massive Bitcoin holdings, with 91,064 BTC recorded on its balance sheet.
Another large chunk of exposure, 18%, is allocated to Square, Jack Dorsey’s crypto company, as well as Riot Blockchain, which boasts 15%. Both of these companies boast significant amounts of Bitcoin exposure. Even PayPal and Nvidia Holdings are involved in this basket as well, both boasting an exposure of 15% each.
Other big names in the basket include Taiwan Semiconductor Company, Advanced Micro Devices, Overstock.com, Intercontinental Exchange, Silvergate Capital, as well as CME Group.
Some Finer Details
As for the reasoning behind the various exposure percentages of this new Crypto Exposure Basket, the filing explained it in detail. JPMorgan classified the Reference Stock weight based, in part, on the exposure it has to Bitcoin, with further factors including overall liquidity and correlation to Bitcoin as a whole.
JPMorgan explained that payouts for this new product will be determined by the performance of this basket of companies. The minimum investment within this new debt instrument has been set at $1,000, and the maturation date has been specified at May of 2022.
Institutions Bullish For Bitcoin
With this product, yet another of the countless possible ways are shown as to how institutional players can tap into the crypto market without all the risks involved in actually owning crypto. The crypto markets are, at its worst, absolute chaos, but highly profitable if you catch it right.
As one would imagine, Wall Street is practically tripping over itself to try and get a piece of this pricey pie, which could actually explain the strong price support for Bitcoin at the moment.
Indeed, Bitcoin is back at the $54,360 range after it experienced a violent crash not even a month ago. It should be noted that the institutions dub this over 25% drop a “healthy correction.”