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Bitcoin (BTC) institutional demand to grow to $600B

JPMorgan analysts that demand for BTC by insurance firms and pension funds could balloon to $600 billion.

Image by mohamed Hassan from Pixabay

Tue, 15 Dec 2020, 17:22 pm UTC

Bitcoin’s (BTC) performed spectacularly this year as the crypto managed to recover from last March’s crash, where the token traded below $4,000 and rallied to its current price above $19,000. But the token’s long term prospect is even more promising as demand from institutional investors is expected to soar further in the coming years.

JPMorgan strategists predict that demand for Bitcoin (BTC) will rise following MassMutual’s $100 million purchase of the crypto, according to Bitcoin.com. In fact, the bank’s analysts say that institutional demand for the world’s largest cryptocurrency could reach $600 billion in the coming years.

In a note on Friday, the bank’s analysts explained that the $100 million Bitcoin purchase by Massachusetts Mutual Life Insurance Co. shows “the potential for additional institutional demand for the cryptocurrency in coming years.” It added that adoption of the crypto is “spreading from family offices and wealthy investors to insurance firms and pension funds.”

MassMutual’s BTC purchase should be interpreted as more than just a simple $100 million buy order, according to Forbes. “It sets a precedent across the insurance and the pension fund sector that BTC is a legitimate store of value,” the publication explained.

“MassMutual's bitcoin purchases represent another milestone in the bitcoin adoption by institutional investors,” JPMorgan analysts explained. “One can see the potential demand that could arise over the coming years as other insurance companies and pension funds follow Massmutual’s example.”

However, the analysts do not expect insurance firms and pension funds to allocate a significant chunk of their portfolios for Bitcoin. The reason is that these institutional investors face regulatory hurdles that limit how much they can invest in the cryptocurrency.

But even a small allocation of the digital currency by institutions could translate to a tremendous demand for BTC. If insurance companies and pension funds in the U.S., the U.K, Japan, and Europe allocate just 1 percent of their portfolios, it would generate a $600 demand for the crypto in the future.

Institutional demand has spiked in recent months as companies started viewing Bitcoin as an inflationary hedge. Coinbase saw its crypto assets under custody balloon increase by $14 billion since April 2021.

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