30s Summary
Wall Street banks made a $1.4 billion profit due to smart investments in Bitcoin futures contracts ahead of the US presidential election. Leading up to the election, banks invested intensely in these contracts which followed Bitcoin’s price without owning it. Post-election, Bitcoin’s price leap resulted in large profits for the banks. The current value of these bets is around $5.3 billion. This investment strategy has prompted a 36% earning in under a month for banks including JPMorgan, Goldman Sachs and SG Americas Securities.
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When bitcoin prices took a flying leap post-election, Wall Street banks were in the perfect position. They made a whopping $1.4 billion, all thanks to their smart bet on Bitcoin.
The weeks leading up to the presidential election saw big banks intensely investing in Bitcoin futures contracts. They stacked up over 10,500 new contracts, equivalent to 52,820 Bitcoin.
Now, if you’re wondering what the heck a future contract is, it’s like betting on Bitcoin’s price down the line without actually having to own any of it. Bigger banks in the U.S. aren’t allowed to directly own Bitcoin, but they can still follow its price movements using these kinds of deals and through certain funds traded on the stock exchange.
The banking honchos poured in about $3 billion into these bets at the Chicago Mercantile Exchange. The average price of their bets was close to $65,800. Since the price of Bitcoin took a 22% jump after Nov. 6, these banks ended up with a cool $1.4 billion in paper profits.
The banks’ interest escalated by $3.5 billion in just a week’s span from Oct. 8 – 15. They took their ownership from 1,200 BTC contracts to a whopping 11,766 contracts. The present value of these bets, keeping in mind the current price of Bitcoin, sits around $5.3 billion. This impressive gambling has given the banks almost 36% earnings in less than a month. Some key players in this game include massive names like JPMorgan, Goldman Sachs, and SG Americas Securities.
The reason for Bitcoin’s spectacular climb is mostly credited to Donald Trump’s reelection on Nov. 6, since the market expects the crypto space to get friendlier treatment under his administration.
The impact of this excitement hasn’t only been felt by the banks. Shares in public firms dealing in crypto have also seen a significant increase. For instance, Coinbase’s stock hopped up more than 20% around Nov. 11, hitting the $300 mark, which hasn’t been seen since 2021.
Data from CoinGecko shows an impressive surge in cryptocurrencies over the past year, with the total market value doubling to a whopping $3.17 trillion by Nov. 13.