JPMorgan Chase & Co chief executive officer Jamie Dimon said he would fire any employee trading bitcoin for being “stupid.”
The cryptocurrency “won’t end well,” he told an investor conference in New York on Tuesday, predicting it would eventually blow up.
“It’s a fraud” and “worse than tulip bulbs,” Dimon said.
If a JPMorgan trader began trading in bitcoin, he said: “I’d fire them in a second. For two reasons: It’s against our rules, and they’re stupid. And both are dangerous.”
Bitcoin has soared in recent months, spurred by greater acceptance of the blockchain technology that underpins the exchange method and optimism that faster transaction times could encourage broader use of the cryptocurrency.
Prices have climbed more than fourfold this year — a run that has drawn debate over whether that is a bubble.
Bitcoin initially slipped after Dimon’s remarks. It was down as much as 2.7 percent before recovering. Last week, it slumped after reports that China plans to ban trading of virtual currencies on domestic exchanges, dealing another blow to the US$150 billion cryptocurrency market.
Tulips are a reference to the mania that swept Holland in the 17th century, when speculators drove up prices of virtually worthless tulip bulbs to exorbitant levels.
In the case of bitcoin, Dimon said he was skeptical that authorities would allow a currency to exist without state oversight, especially if something goes wrong.
“Someone’s going to get killed and then the government’s going to come down,” he said. “You just saw in China, governments like to control their money supply.”
Dimon differentiated between the bitcoin currency and the underlying blockchain technology, which he said can be useful.
Still, he said banks’ application of blockchain “won’t be overnight.”
The bank chief said he would not short bitcoin because there is no telling how high it will go before it collapses.
He said the best argument he had heard is that it can be useful to people in places with no other options — so long as the supply of coins does not surge.
“If you were in Venezuela or Ecuador, or North Korea or a bunch of parts like that, or if you were a drug dealer, a murderer, stuff like that, you are better off doing it in bitcoin than US dollars,” he said. “So there may be a market for that, but it’d be a limited market.”
To be sure, Dimon later noted that his daughter purchased some bitcoin.
“It’s interesting that somebody with that high profile of the establishment is out there with that bold statement,” DoubleLine Capital chief investment officer Jeffrey Gundlach said in a webcast on Tuesday after Dimon’s remarks.
Gundlach said he did not have a view on bitcoin, but that he was concerned it could be more vulnerable to manipulation than enthusiasts admit.
“Maybe I’m just too old, but I’m going to let this mania go on without me, ” Gundlach said.
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