Wall Street bets on the 2028 bull run! JPMorgan promotes Bitcoin notes with 1.5 times leverage and no limit.

JPMorgan has launched structured notes betting on the four-year cycle pattern of Bitcoin: rising after Halving, a Bear Market two years later, followed by a bull run. This product is linked to BlackRock's Bitcoin Spot ETF, with observation points set for 2026 and 2028. If held until the 2028 bull run and IBIT exceeds the target price, a return of 1.5 times the increase will be granted with no upper limit. If there is no increase by 2026, it can be extended to 2028, and losses occur only if the drop exceeds 40%.

Bitcoin Four-Year Cycle Logic: Notes Just Hit the Point

(Source: SEC)

Since its inception, Bitcoin has been widely regarded by market observers as having a distinct “four-year cycle” in its price trend: after each block reward Halving (approximately every four years), it usually leads to a price-pumping bull run; followed by an adjustment phase into a Bear Market about two years later, and then strengthening again around the next Halving or its eve. This cyclicality stems from structural changes on the supply side, as each Halving reduces the rate of new Bitcoin production by half, which slows down the supply growth, thereby pushing up prices under stable or growing demand.

In 2024, Bitcoin has completed its most recent Halving, with block rewards decreasing from 6.25 coins to 3.125 coins. If historical patterns repeat, the market may face a correction in 2026, followed by a strong bull run in 2028. The structured notes launched by JPMorgan are perfectly aligned with this cyclical expectation. This timing reflects Wall Street institutions' in-depth research and recognition of Bitcoin's cyclical patterns.

Historically, this four-year cycle does exist. After the first Halving in 2012, Bitcoin surged from $13 to $1,100 in 2013; after the second Halving in 2016, the bull run in 2017 drove Bitcoin from $650 to $19,666; after the third Halving in 2020, the bull run in 2021 pushed Bitcoin from $8,000 to $69,000. About 12-18 months after each Halving, Bitcoin prices reach historical highs, followed by a correction of 70%-85% within 2-3 years, and then the bull run restarts around the next Halving.

The design of Morgan Stanley's notes is based on this pattern. 2026 is expected to be an adjustment period, so a “extend if not pumped” mechanism has been set up; 2028 is expected to be the peak of a bull run, so a high leverage return mechanism has been implemented. This product design based on cyclical patterns is extremely rare in traditional finance, indicating that the market behavior of Bitcoin has been deeply understood by institutions and transformed into tradable financial products.

Bitcoin Four-Year Cycle History

2012 Halving: 2013 bull run pumped to $1,100 (an 84-fold increase from $13)

Halving in 2016: The 2017 bull run pumped to 19,666 USD (a 30 times increase from 650 USD)

2020 Halving: 2021 bull run pumped to $69,000 (an 8.6 times increase from $8,000)

2024 Halving: Expecting a 2025-2026 bull run, with the next peak possibly arriving in 2028.

If it doesn't pump in 2026, we'll “continue the party” into the 2028 bull run

This structured note is linked to the Bitcoin Spot ETF (IBIT) launched by BlackRock. The product's mechanism is cleverly designed and observed in two phases: the first observation period ends at the end of 2026. If the price of IBIT rises compared to the price at the time of product issuance, the note will be “redeemed early,” and investors can receive at least a 16% fixed return, which comes from the IBIT options premium.

If IBIT does not rise, the note will be extended to the end of 2028, and investors will continue to hold the position, enjoying the potential for higher returns. This “rollover” mechanism is the core innovation of the product design. Traditional structured products typically have a fixed maturity date, and if the underlying asset does not reach the target, investors can only accept losses or limited gains. JPMorgan's design allows investors to “wait for the next bull run,” which perfectly aligns with the cyclical nature of Bitcoin.

From an investor's perspective, this mechanism provides great flexibility. If Bitcoin does indeed enter a Bear Market in 2026 as predicted by the cycle theory, investors will not be forced to exit at a low point, but can hold until the potential bull run peak in 2028. This design reduces the risk of “timing errors” because the short-term price of Bitcoin is extremely difficult to predict, while the regularity of multi-year cycles is relatively more reliable.

A fixed return of 16% comes from the premiums of IBIT options, which is a common source of income for structured notes. As the issuer, JPMorgan sells call options on IBIT to collect premiums, a portion of which is used to pay investors' fixed returns. This strategy is known in the options market as “Covered Call,” which is a relatively robust income enhancement strategy.

1.5x leverage returns with unlimited explosiveness

If held until the end of 2028, and the price of the IBIT ETF exceeds the ultimate target price set by JPMorgan, investors will receive at least 1.5 times the return of the original investment (the increase in IBIT) with no upper limit. This means that if the Bitcoin market surges as expected in 2028, the returns could far exceed those of traditional investment tools.

For example, let's illustrate the power of this mechanism. Suppose an investor buys a note when the price of Bitcoin is $90,000, and by 2028 Bitcoin rises to $270,000 (an increase of 200%). The return on traditional investments is 200%, but the return on this note is 200% × 1.5 = 300%. If Bitcoin rises to $450,000 (an increase of 400%), the return on the note is 400% × 1.5 = 600%. This amplification effect is highly attractive in a bull run.

“Unlimited” is another key feature. Many structured products set a cap on returns, such as “maximum profit of 50%”. JPMorgan's design does not have such limitations, which means that if the 2028 bull run is as frenzied as in 2021, and Bitcoin rises 5-10 times from its current price, investors' returns will be 7.5-15 times. Such potential returns are extremely rare in traditional financial products.

However, this high return comes with high risk. A leverage of 1.5 times amplifies the gains, but it also means that if the investor makes a wrong judgment, the losses will be magnified. Moreover, holding until 2028 means a capital lock-up period of 3-4 years, during which adjustments cannot be made flexibly. For investors with a lower risk appetite or those who need liquidity, this type of product may not be suitable.

fall over 40% to trigger the loss protection mechanism

Although this product is designed to provide multiple profit opportunities, it is not without risks. JPMorgan emphasizes that the notes do not guarantee principal. If held until 2028, and the price of the IBIT ETF falls by more than 40%, investors will suffer proportional losses on their principal according to the extent of the decline. This “40% protection cushion” is a key risk parameter in the product design.

JPMorgan wrote in its risk statement: “If the final price of IBIT at maturity is below our set 'barrier price' (i.e., 60% of the initial price), investors will lose 1% of their principal for every 1% drop.” This means that in the event of an extreme Bear Market, the worst-case scenario could lead to a total loss of principal.

For example, explain the risk mechanism. Suppose an investor buys a note when Bitcoin is at $90,000, and the barrier price is $54,000 (60%). If the Bitcoin price in 2028: (1) is above $90,000: earns 1.5 times the increase; (2) is between $54,000 and $90,000: earns a fixed return of 16% (early redemption in 2026) or a slight return (maturity in 2028); (3) is below $54,000: proportionate loss of principal. If it falls to $45,000 (a fall of 50%), the loss is 50%; if it falls to $18,000 (a fall of 80%), the loss is 80%.

This structure poses a triggering risk during the historical bear market of Bitcoin. The low point of the 2022 bear market was around 16,000 USD, a drop of 77% from the 2021 high of 69,000 USD. If a similar decline occurs again in the future, investors will face significant principal losses. Therefore, this product is only suitable for investors who firmly believe in the long-term rise of Bitcoin and can withstand substantial losses in the worst-case scenario.

Why do Wall Street institutions promote such products

The timing of JPMorgan's product launch is intriguing, coinciding with an increasing number of large Wall Street institutions attempting to participate in the crypto market with a “controlled risk and clear logic” approach. Compared to directly buying coins or making swing trades, structured notes allow asset managers to make “conditional bets” to seize the opportunity when market trends change.

In addition, following the approval of the Bitcoin ETF by the US SEC, the market's demand for legal, transparent, and regulated cryptocurrency financial products has surged. Structured notes have become the latest component of this new trend, marking the increasing integration of traditional finance and digital assets.

From a banking perspective, structured notes are high-profit products. Banks create these products through complex derivatives combinations (trading options, swaps, etc.), earning the spread between the structural cost and the selling price. This spread typically ranges from 2% to 5%, and for products in the hundreds of millions of dollars, the profits are quite substantial. Therefore, banks have a strong motivation to develop such products.

For qualified investors (typically requiring a net worth of over $1 million or an annual income of over $200,000), structured notes offer an investment option different from directly holding Bitcoin or purchasing ETFs. It combines the potential returns of Bitcoin with fixed income and partial protection mechanisms, creating a hybrid product with risk-return characteristics between bonds and stocks.

Frequently Asked Questions

Who are the JPMorgan Bitcoin notes suitable for?

Suitable for qualified investors who believe in the 2028 bull run cycle, can lock in funds for 3-4 years, and can withstand significant principal losses in the worst-case scenario. Not suitable for investors who need liquidity or have low risk tolerance.

How is the 16% fixed reward generated?

A: From IBIT options premiums. JPMorgan sells covered call options to collect premiums, part of which is used to pay fixed returns to investors.

What if Bitcoin stagnates in 2026?

If the IBIT price does not pump, the notes will be extended to 2028, allowing investors to continue holding and waiting for the next bull run without being forced to exit at a low point.

How is 1.5x leverage achieved?

Through options combinations. JPMorgan may buy call options and sell some put options to create a leverage effect. The specific structure has not been disclosed, but the principle is to amplify upside gains through derivatives.

How much will be lost in the worst-case scenario?

If Bitcoin falls below 60% of its initial price (the barrier price) in 2028, investors will proportionally lose their principal. In extreme cases, if Bitcoin goes to zero, investors will lose all their principal.

Why not buy Bitcoin or IBIT ETF directly?

Structured notes provide leverage (1.5 times) and partial protection (capital protection within a 40% fall), but sacrifice liquidity and part of the upside gains (structural costs must be paid). Suitable for investors with specific risk preferences.