Ryze Recap 8/13: JP Morgan to Lead $50M Investment In Blockchain Company

Plus, NASDAQ-Listed Company Buys $250M of Bitcoin

It’s Thursday, August 13th. If you’re new here— Ryze Recaps is a newsletter synthesizing the biggest news Bitcoiners need to know, in 2 minutes or less.

We’ve got two main stories for you today.

JP Morgan to Lead $50M Investment in ConsenSys

JP Morgan is in talks to lead a $50M debt financing round in blockchain company ConsenSys. JP Morgan may also merge its own blockchain division, Quorum, with ConsenSys. This deal is part of a growing trend we've seen this year as more and more financial institutions venture into the blockchain and crypto-asset space, and marks a stark contrast from JP Morgan's prior outspokenly negative view of crypto.

What we know:

  • JP Morgan is set to invest $20M out of $50M in a convertible debt deal to finance ConsenSys, which works and invests primarily within the Ethereum ecosystem. ConsenSys will support and maintain JP Morgan's own Ethereum-based Quorum.

  • Both companies are focused on enterprise applications of blockchain technology. ConsenSys has implemented blockchain solutions for multinational brands including Louis-Vuitton Moet Hennesey, ING, Citibank, BNP Paribas, and Shell. Quorum operates the Interbank Information Network, a payments network comprised of over 300 banks.

Why it matters:

  • JP Morgan was infamously bearish on Bitcoin and blockchain technology, with its CEO Jamie Dimon calling Bitcoin a fraud in 2017. Yet, more recently, America's largest bank by assets has done a complete 180 and come out in support of Bitcoin as an asset, and is clearly bullish on Ethereum as well. Through ConsenSys, JPM will gain exposure to a whole host of Ethereum-based projects and applications

  • While some would argue that big banks are the antithesis of Bitcoin and decentralized ledger technology, adoption by these giants helps bring more people into the fold by normalizing these new assets and technologies. Whether it’s banks offering crypto custody through the OCC ruling, or JP Morgan investing in enterprise blockchain technology, these developments are ultimately good for the proliferation and adoption of Bitcoin and crypto-assets.

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Publicly-Traded Company Buys $250M of Bitcoin

Microstrategy, a NASDAQ-listed software company worth $1.2B, purchased 21,454 Bitcoin on Tuesday. Last week, we mentioned that the firm was looking to diversify some of its treasury holdings into alternative investments as a hedge against inflation. In its latest letter to shareholders, Microstrategy expressed it was considering both Bitcoin and gold to achieve this purpose. On Tuesday, they committed 100% of their allocation into alternative investments into Bitcoin.

What they’re saying:

  • "We find the global acceptance, brand recognition, ecosystem vitality, network dominance, architectural resilience, technical utility and community ethos of bitcoin to be persuasive evidence of its superiority as an asset class for those seeking a long-term store of value." — Microstrategy CEO Michael Saylor

Why it matters:

  • As fiat currencies weaken globally in response to quantitative easing and economic uncertainty, businesses, financial institutions, and consumers alike are waking up to the potential Bitcoin has as a hedge against inflation. Those looking to protect their wealth— whether its a company preserving its treasury reserves or a consumer worried about their life savings, are flocking to Bitcoin.

  • Microstrategy's diversification into BTC paves the road for other companies to follow suit. We will likely see other companies begin to add Bitcoin to their balance sheets to protect against looming USD inflation. It's not a question of if, but rather when.

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In case you missed it

Ethereum Transaction Fees Near All-Time-High

Median transaction fees on the Ethereum blockchain have reached $3, just shy of the $3.03 historic high in 2017. Ethereum transaction fees (gas fees) hit $6.87M yesterday, smashing the previous record of $4.55M. This increase in fees is a product of the explosion in Ethereum-based DeFi trading protocols such as Uniswap. For comparison, Bitcoin's fees yesterday were 4x lower than Ethereum's— totaling $1.48M across the entire network.

Coinbase Exits Lobbying Group as Binance Enters

Coinbase has dropped out of the Blockchain Association, a DC-based crypto-asset lobbying group. Binance.US, the branch of Binance catering to US consumers, was recently admitted into the group. Though Coinbase doesn't directly call out Binance's entry as the reason for their departure, Coinbase alludes to "membership criteria" which may not have been met and the potential for Binance to "irreparably impair the credibility of the association" in a letter. As Binance seeks to regain a foothold in the Coinbase-dominated US consumer crypto markets, expect increasing tensions between the two giants.

That’s all for today! We’ll be back again with another Ryze Recap.

Written by Ryze— we help you stack sats and buy the dip, automatically. #BTFD