The five Swiss banks Julius Baer Group, which manage $ 427 billion in assets, announced on July 20 that their profits increased by $ 524 million in the past two quarters. Most likely, the bank has benefited from an increase in business revenue in the United States and Europe.
Julius Baer’s profit reportedly increased 34% in the first half of 2020. It coincides with the bank’s introduction of a digital asset custody service, such as Bitcoin (BTC), in January.
General increase in global bank income or the integration of Bitcoin?
The trend of major banks in the second quarter of 2020 suggests a massive increase in business revenue. The pandemic and the introduction of stimulus packages fueled a retail “fear of getting lost” (FOMO) rebound in the stock market.
The notable increase in retail demand for shares led to an increase in the income of banks, especially commercial departments. JPMorgan, as an example, earned $ 4.7 billion in net income in the second quarter of 2020. The US investment bank recorded its highest quarterly income in history.
JPMorgan CEO Jamie Dimon said July 14:
“We earned $ 4.7 billion in net income in the second quarter despite accumulating $ 8.9 billion in credit reserves because we generated our highest quarterly income, demonstrating the benefit of our diversified global business model.”
Like other banks, Julius Baer’s increase in earnings probably comes from high levels of retail trade since early April. While Bitcoin recorded high volatility from March to May, from June onward, it has seen historically low levels of volatility.
Stocks have been significantly more volatile in recent weeks. Sellers and buyers triggered large short-term movements in the stock market as anticipation of new stimuli continually increased.
But, as Coinbase explained, Bitcoin saw a huge increase in demand from retail users after “Black Thursday.” On March 13, BTC fell below $ 3,600, wreaking havoc on the cryptocurrency market.
Bitcoin’s price dropped below $ 3,600 in March. Source: TradingView.com
In the next two months since the massive correction, Bitcoin experienced a 190% rally from $ 3,600 to $ 10,440. Since Julius Baer added support for digital assets in January, he could have benefited from Bitcoin’s volatility from March to May.
Julius Baer said on January 21:
Julius Baer has expanded its range of services and, as of now, includes digital asset offerings such as secure storage and transaction solutions […]. The Bank can offer access to a select group of cryptocurrencies, chosen for their merchantability, security and technical reliability. “
It seems that more and more banks are becoming more comfortable with crypto
Since the early 2020s, an increasing number of major financial institutions have started supporting Bitcoin exchanges.
On May 12, for example, JPMorgan Chase added Coinbase and Gemini as its clients. This suggests that major banks are beginning to adopt the new asset class. In previous years, JPMorgan CEO Jamie Dimon harshly criticized Bitcoin, saying it “is not a real thing,” according to CNBC.
The rise in profits of increasingly crypto-friendly banks, such as Julius Bear and JPMorgan, appears to be yet another sign of growing institutional demand and improving perception of Bitcoin as an alternative asset class.
