The demand for Bitcoin is rising among institutional investors like pension funds and insurance firms. The latest move by MassMutual into crypto is being highlighted as a signal for better demand according to JP Morgan.
JP Morgan talks Bitcoin
JP Morgan Chase & Co. the Wall Street banking giant suggests that the recent $100 million Bitcoin purchase of Bitcoin by Massachusetts Mutual Life Insurance Co. underscores an increasing demand for cryptocurrencies among institutional investors.
In a Friday note, strategists from the lender including Nikolaos Panigirtzoglou said that wealthier investors, family offices, and institutional entities like pension funds and insurance firms are now eyeing Bitcoin investments. While both insurance firms and pension funds are not expected to make huge allocations to cryptocurrencies, even a small investment by them suggests a positive shift to crypto. It could be a significant positive move towards digital currencies.
The strategists wrote,
“MassMutual’s Bitcoin purchases represent another milestone in the Bitcoin adoption by institutional investors. One can see the potential demand that could arise over the coming years as other insurance companies and pension funds follow MassMutual’s example.”
Bitcoin value drops after record highs
The value of Bitcoin has dropped slightly after reaching record highs at the beginning of the month. Despite the fall, the coin remains close to the $20,000 level. Proponents of Bitcoin investments claim that the coin is gaining more recognition as a tool to diversify portfolios while the US dollar remains weak. This helps in cementing the coin’s value proposition as an alternative to gold which is prone to higher volatility.
The strategists believe that if insurance companies and pension funds based in the US, UK, Japan, and the Eurozone allocate only 1% of their assets in Bitcoin, the additional demand for the coin could cross $600 billion. According to CoinMarketCap, the current market capitalization of the currency is around $365 billion. The strategists also acknowledged that regulatory hurdles related to liability mismatches and risk levels could prevent these institutional investors from allocating a large portion of their assets to cryptocurrencies.
JP Morgan Sees MassMutual’s Bitcoin Foray as a Signal for Better Demand