Originally published on: November 13, 2024
The recent surge in Bitcoin prices has not only captivated crypto enthusiasts but also big banks on Wall Street. Estimates from Forbes suggest that post-election gains have pushed these banks’ profits to a whopping $1.4 billion.
In the weeks leading up to the presidential election, major banks reportedly dove into Bitcoin futures contracts, accumulating a total of 10,564 contracts, equivalent to 52,820 BTC. While U.S. banks are generally prohibited from directly holding Bitcoin, they found an alternative route to profit from its price fluctuations through derivatives and exchange-traded funds (ETFs).
Market data reveals that banks’ long positions on Bitcoin futures at the Chicago Mercantile Exchange (CME) amounted to $3 billion, with an average purchase price of $65,800. With Bitcoin’s price soaring by 22% since Nov. 6, banks have raked in paper gains of about $1.4 billion.
The surge in Bitcoin’s price has led to a substantial increase in banks’ open interest, from 1,200 BTC futures contracts worth $373 million to 11,766 contracts worth $3.8 billion. With the current value of their held position estimated at around $5.3 billion, banks have enjoyed gains of nearly 36% in less than a month.
Notable financial institutions participating in crypto derivatives markets include JPMorgan, Goldman Sachs, and SG Americas Securities. The recent bullish trend in Bitcoin is largely attributed to the U.S. presidential election, signaling a positive outlook for crypto markets under the new administration.
In addition to the surge in Bitcoin prices, publicly traded crypto companies have seen significant growth in their stock prices. Coinbase’s stock (COIN) surged over 20% on Nov. 11, reaching the $300 mark for the first time since 2021.
As the cryptocurrency market continues to expand, with a market capitalization of $3.17 trillion as of Nov. 13, up 119% from the previous year, Wall Street banks are closely monitoring the lucrative opportunities presented by Bitcoin’s record-breaking highs.
