JPMorgan’s analysts have predicted significant demand for bitcoin following the $100 million purchase of the cryptocurrency by Massmutual. The analysts believe that other traditional investors, including pension funds, will follow suit, leading to a conservative estimate of $600 billion demand for bitcoin.
$600 Billion Demand for Bitcoin
JPMorgan Chase’s analysts wrote a note Friday explaining why they see significant demand for bitcoin. They explained that the recent investment of $100 million in the cryptocurrency by mega insurer Massachusetts Mutual Life Insurance Co. (Massmutual) highlights “the potential for additional institutional demand for the cryptocurrency in coming years,” Bloomberg conveyed. The note adds that the purchase “suggests adoption of bitcoin is spreading from family offices and wealthy investors to insurance firms and pension funds.”
The JPMorgan analysts further detailed, “Massmutual’s bitcoin purchases represent another milestone in the bitcoin adoption by institutional investors,” elaborating:
One can see the potential demand that could arise over the coming years as other insurance companies and pension funds follow Massmutual’s example.
They explained that traditional investors like insurance companies and pension funds face regulatory hurdles relating to the “risk levels and liability mismatches” that would limit how much they can invest in bitcoin.
While the analysts do not expect large insurance companies and pension funds to dive into the cryptocurrency with heavy weighting, they believe that even a small portfolio allocation, such as 1%, in BTC could be significant for its market.
With bitcoin outperforming most other assets this year, the analysts explained that “if pension funds and insurance companies in the U.S., euro area, U.K. and Japan allocate 1% of assets to bitcoin, that would result in additional bitcoin demand of $600 billion,” the news outlet conveyed.
Institutional interest in bitcoin has been rising rapidly. Recently, the CEO of Standard Chartered Bank said that widespread cryptocurrency adoption is “absolutely inevitable,” while the CEO of Blackrock said bitcoin can 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 survey by Fidelity shows that the majority of institutional investors feel that cryptocurrencies have a place in their portfolios.
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