JPMorgan Chase: Institutional investment in Bitcoin may usher in $600 billion in incremental demand

Source: Cailianshe

Author: Bian Chun

Cailian Press (Shanghai, editor Bian Chun) reported that JPMorgan Chase & Co. recently pointed out that the latest investment in Bitcoin by the 169-year-old Massachusetts Mutual Life Insurance highlights that institutional demand for Bitcoin may increase in the coming years.

Founded in 1851, Massachusetts-based MassMutual, a U.S. mutual life insurance company serving 5 million customers, disclosed Thursday that it had purchased $100 million worth of Bitcoin for its general investment fund, becoming the latest mainstream company to dabble in the cryptocurrency asset.

JPMorgan strategists led by Nikolaos Panigirtzoglou pointed out in a report last Friday (December 11) that the $100 million investment shows that the acceptance of Bitcoin is spreading from family offices and wealthy investors to insurance companies and pension funds. Although insurance and pension fund institutions are unlikely to allocate Bitcoin in a large amount, even a small shift to Bitcoin may have a significant impact.

"Massachusetts' entry marks another milestone in Bitcoin's acceptance by investors," the strategists said. "As other insurance companies and pension funds follow suit, we can foresee that potential institutional demand for Bitcoin will rise in the coming years."

JPMorgan strategists said that if pension funds and insurance companies in the United States, the eurozone, the United Kingdom and Japan allocated 1% of their assets to Bitcoin, it would lead to an increase of $600 billion in demand for Bitcoin. According to CoinMarketCap data, Bitcoin currently has a market value of about $350 billion.

However, strategists also warned that traditional investors such as insurance companies and pension portfolios face regulatory hurdles related to risk levels and debt mismatches that could limit their investment in Bitcoin.

In early December, the price of Bitcoin hit an all-time high of $19,844, surpassing the previous high set in December 2017. Although it has since fallen back, it is still expected to hit the $20,000 mark.

It is worth noting that some analysts pointed out that compared with the Bitcoin rally driven by retail investors in 2017, institutional investors played a greater role in this round of market, with quantitative funds, asset management companies and family offices all betting on Bitcoin.

Market views on the future of Bitcoin are sharply polarized, with supporters arguing that cryptocurrencies are gaining acceptance as a portfolio diversification tool at a time of dollar weakness, somewhat similar to gold, while others call for caution, citing higher volatility and greater susceptibility to scandals in the cryptocurrency market.