In a recent investor note, JPMorgan analysts argued that the true long-term risk to Bitcoin is not corporate sell-offs like those by Strategy, but rather a structural shift where institutions increasingly favor private, permissioned blockchain networks over public ones.
Analyst Nikolaos Panigirtzoglou downplayed concerns about Strategy’s potential sales, even though the company holds roughly 4% of Bitcoin’s circulating supply. Instead, the note highlighted that the real danger lies in traditional finance adopting distributed ledger technology that bypasses permissionless networks entirely.
JPMorgan itself exemplifies this trend with Kinexys, its permissioned blockchain rail used for institutional settlements, which has already processed over $4 trillion in cumulative transaction volume. The bank noted that incumbent financial institutions are reaping the benefits of blockchain without engaging with public cryptocurrencies.
The analysts warned that even if the CLARITY Act passes, providing regulatory clarity, it might not help Bitcoin. Instead, clearer rules could accelerate the issuance of tokenized deposits by banks, crowding out public blockchain-based stablecoins. They also pointed to SWIFT’s blockchain initiative and central bank digital currency projects like the digital euro and digital yuan as further strengthening regulated alternatives.
The $50 billion market for real-world asset tokenization is still “early experimentation,” according to JPMorgan. While Ethereum currently holds a share, the analysts expect that as institutional adoption grows, processes like issuance, custody, and lifecycle management will migrate to private infrastructures that meet privacy, KYC/AML, and operational requirements. Public blockchains would then be limited mainly to distribution and restricted secondary market activity.
The note concluded that this transformation could become a long-term pressure point not only for Ethereum and similar networks, but for the entire crypto market and, indirectly, for Bitcoin, potentially leading to a structural loss of value, reduced transaction activity, lower liquidity, and declining capital inflows.
