Photographer: Chris Radcliffe / Bloomberg
Photographer: Chris Radcliffe / Bloomberg
The latest investment in Bitcoin JPMorgan Chase & Co., Massachusetts Mutual Life Insurance, highlights the potential for additional institutional demand for cryptocurrency in the coming years.
The Strategists, including Nicholas Panigertsoklo, said in a statement on Friday that the $ 100 million purchase of Bitcoin adoption was spreading from family offices and wealthy investors to insurance companies and pension funds. The latter two are unlikely to make much of an allocation, but strategists say even a small shift toward cryptocurrency would be significant.
“MassMutual’s Bitcoin acquisition marks another milestone in the adoption of Bitcoin by institutional investors,” strategists said. “One can see the potential demand that may arise in the coming years as other insurance companies and pension funds follow the mass mutual model.”
Bitcoin has fallen since hitting a record in early December, but it is looking at the $ 20,000 level, which has not yet been reached. Proponents argue that cryptocurrency is gaining more recognition as a portfolio diversifier amid dollar weakness, which is somewhat similar to gold. Others are wary of such massive claims as the crypto world is prone to high volatility and corruption.
Strategists say that if pension funds and insurance companies in the United States, the euro area, the UK and Japan allocate 1% of their assets to bitcoin, it will result in an additional $ 600 billion in demand for bitcoin. According to CoinMarketCap, the current market capitalization of cryptocurrency is about $ 6,356 billion.
At the same time, JPMorgan strategists wrote that traditional investors, such as insurers and pension departments, face regulatory constraints related to risk levels and liability inconsistencies, which restrict how much can be paid in bitcoin.