Bitcoin’s Surge Pushes Big Banks’ Profits to Billions, Report Reveals

November 14, 2024 — Bitcoin’s dramatic price surge following the recent presidential election has sent shockwaves through financial markets, with major Wall Street banks reportedly raking in over $1.4 billion in paper gains from Bitcoin futures contracts.

According to estimates from Forbes, banks that bet on Bitcoin’s rise before the election have seen substantial profits. In the weeks leading up to the vote, some of the largest financial institutions in the U.S. — including JPMorgan, Goldman Sachs, and SG Americas Securities — accumulated Bitcoin futures contracts, giving them indirect exposure to the cryptocurrency’s volatile price movements.

Banks Take Big Bets on Bitcoin Futures

Through Bitcoin futures, financial institutions can speculate on the cryptocurrency’s price without actually holding it. With most U.S. banks prohibited from directly owning Bitcoin, these futures contracts have become a popular way to tap into the crypto market.

The analysis reveals that banks amassed 10,564 new Bitcoin futures contracts — equivalent to approximately 52,820 BTC — in the lead-up to the election. This represents a significant increase in open interest, jumping from just 1,200 contracts worth $373 million in early October to nearly 11,800 contracts worth around $3.8 billion by mid-month.

As Bitcoin surged post-election, the value of these contracts has skyrocketed. Since November 6, the price of Bitcoin has risen by more than 22%, pushing the value of these positions to an estimated $5.3 billion, translating into $1.4 billion in paper gains for the banks holding them.

Bitcoin’s Price Boosted by Political Shifts

Bitcoin’s remarkable rise is largely attributed to the victory of Donald Trump in the presidential election, with many in the crypto community speculating that a Trump administration would result in more favorable regulatory policies for the industry. Market analysts also believe that the election outcome has fueled optimism about increased institutional adoption of cryptocurrency, driving prices higher.

In addition to the surge in Bitcoin futures, stocks of publicly traded crypto companies have also seen significant gains. Shares of Coinbase (COIN), for example, spiked by more than 20% on November 11, reaching the $300 mark for the first time since 2021.

Crypto Market’s Booming Valuation

The broader cryptocurrency market is also seeing a historic surge. As of November 13, the total market capitalization of all cryptocurrencies has reached an impressive $3.17 trillion, marking a 119% increase from the same time last year.

With Bitcoin’s meteoric rise and the potential for more institutional involvement, it seems clear that the crypto market is entering a new era — one where traditional financial players are increasingly becoming key participants in the space.