JPMorgan’s analysts have predicted significant demand for bitcoin after Massmutual’s $ 100 million purchase of the cryptocurrency. The analysts believe that other traditional investors, including pension funds, will follow suit, leading to a conservative estimate of demand for bitcoin of $ 600 billion.
$ 600 billion demand for Bitcoin
JPMorgan Chase’s analysts wrote a letter on Friday explaining why they see a high demand for bitcoin. They explained that the recent $ 100 million investment in the cryptocurrency by mega insurer Massachusetts Mutual Life Insurance Co. (Massmutual) highlights “the potential for additional institutional demand for the cryptocurrency in the coming years,” said Bloomberg. The note adds that the purchase “suggests that bitcoin adoption is spreading from family offices and high net worth investors to insurance companies and pension funds.”
The JPMorgan analysts further detailed, “Massmutual’s bitcoin purchases represent a new milestone in bitcoin adoption by institutional investors,” explaining:
One can see the potential demand that could arise in the coming years if other insurance companies and pension funds follow Massmutual’s lead.
They explained that traditional investors such as insurance companies and pension funds face regulatory hurdles regarding the “levels of risk and mismatches in liability” that would limit how much they can invest in bitcoin.
While the analysts don’t expect major insurance companies and pension funds to dive heavily into the cryptocurrency, they believe that even a small portfolio split, such as 1%, in BTC could be significant to its market.
As bitcoin outperformed most other assets this year, the analysts explained that “if pension funds and insurance companies in the US, euro area, UK and Japan allocate 1% of assets to bitcoin, that would result in additional demand for bitcoin of $ 600 billion, “the newscast.
Institutional interest in bitcoin has grown rapidly. Recently, Standard Chartered Bank’s CEO said widespread cryptocurrency adoption is “absolutely inevitable,” while Blackrock’s CEO said bitcoin could evolve into a global market. Ready for institutional demand, a growing number of major banks have started offering cryptocurrency services, including Standard Chartered Bank, BBVA, and DBS. A Fidelity survey found that the majority of institutional investors believe cryptocurrencies have a place in their portfolios.
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