Opinion: If institutions allocate 6.5% of their investments to Bitcoin, it will reach $500,000

Many believe that institutional investment has driven Bitcoin’s price to new ATHs over the past year, and new research has found that based on data from 2017, the asset’s price rise doesn’t seem to be driven by hype, but rather by more trust.

Among many conclusions, ARK Invest in its Bitcoin: Preparing for Institutions report talked about how Bitcoin could reach a new ATH. If all S&P 500 companies allocated 1% of their cash to Bitcoin, the price of the asset would also rise by about $40,000.

Institutional investors have recently viewed Bitcoin as a hedge against inflation risks and a long-term alternative to cash. Even ARK estimates that the digital asset seems to be gaining more trust, and some companies even "treat it as cash on their balance sheets."

Additionally, CryptoQuant CEO Ki Young Ju noted that 15,200 BTC (worth $500 million) flowed out of the Coinbase exchange. He believes the transactions indicate that entities are acquiring more Bitcoin.

Such investors can also try to acquire Bitcoin through “complex means”. As of October last year, Bitcoin holdings also reached an all-time high on CME. Considering the daily returns of various asset classes over the past 10 years, ARK further suggests that the allocation to Bitcoin should range from 2.55% for minimal volatility to 6.55% for maximum returns. The ARK investment team further wrote:

Based on ARK’s simulated portfolio allocations, an institutional investment allocation between 2.5% and 6.5% could have a price impact of $200,000 to $500,000 for Bitcoin.

Michael Bucella, general partner at investment firm BlockTower Capital, recently spoke about the emerging group of institutions with “huge amounts of capital” that are reallocating investments to cryptocurrencies. He said:

“If you think about the supply and demand model for commodities, the supply curve for Bitcoin decreases gradually over time toward zero, while demand increases exponentially.”

However, Bitcoin has had a volatile few weeks, with the price not completely controlled by the bullish narrative. At press time, Bitcoin is over $35,000, having gained more than 3% roughly over the past 24 hours. The new price action could be the result of MicroStrategy’s additional purchase of 295 BTC.

Original article: https://ambcrypto.com/heres-what-it-would-take-to-push-bitcoins-price-to-500000/

By Alisha Roy

Compiled by: Xiyu

Source: Babbitt Information