Compass Investments

JPMorgan Chase introduced a new leveraged instrument that allows investors to make predictions about the future value of bitcoin through BlackRock’s iShares Bitcoin Trust.

If this initiative is approved, market participants will be able to receive income exceeding the growth of the cryptocurrency by 1.5 times.

However, like all leveraged instruments, this product carries a risk: losses could be significantly increased if Bitcoin prices decline.

JPMorgan Chase has asked regulators to launch a leveraged instrument that would allow investors to bet on the upcoming price of Bitcoin – and potentially earn a return

– if BTC falls by the end of next year, followed by a possible rise by 2028.

On Monday, the bank sent a statement to the U.S. Securities and Exchange Commission (SEC) clarifying that the proposed structured leveraged note would allow investors to place large bets on the major cryptocurrency through the BlackRock iShares Bitcoin Trust exchange-traded fund.

However, this financial instrument has its own specific conditions. According to the prospectus, if the value of the Bitcoin ETF by December 21, 2026 will be equal to or exceed the specified level, JPM will redeem the bonds, guaranteeing a minimum payment of $160 for each bond (with a face value of $1,000). If the price falls below this level one year later, the bonds will continue to be traded until 2028.

In such a situation – subject to SEC approval, of course – investors can expect a 1.5-fold return on any increase in the value of cryptocurrency until 2028, which opens up the prospect of a very substantial profit. JPMorgan characterized the potential returns as unlimited, which implies that if bitcoin reaches new heights by 2028 (and the price of the ETF follows), the increased returns promise to be impressive.

However, if the bitcoin price drops significantly – by 40% or more – investors risk losing a significant portion of their investment, the report says. Great risk comes with great reward … or loss.

Bitcoin has historically exhibited high price volatility relative to more traditional asset classes and has experienced extreme swings in recent periods, which may continue, increasing the volatility of the fund,

the document states.

Bloomberg ETF analyst James Seyffarth commented on Decrypt that it