Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.
Bitcoin has been the hot subject for analysts after its recent price surge and its strong withstanding against the falling stock market. As institutional money pour has started in BTC, analysts expect its price to easily 4x from the current levels.
Bitcoin‘s latest price rally in the market has drawn the attention of analysts and investors from the traditional financial space. With big institutions participating in the crypto space, even the BTC critics are forced to have a look at it. Over the last week, the BTC price has surged by nearly 13%, as per data on CoinMarketCap. At press time, Bitcoin is trading at $13,738 with a market cap of $254 billion.
Brian Estes, chief investment officer and managing partner at Off The Chain Capital says that this is just the beginning. Speaking to CoinTelegraph, he expects all corporate treasuries to have a small number of their reserves in Bitcoin.
Recently, a large number of companies have started putting a small percent of their treasury fund into Bitcoin. Over the last few months, business intelligence firm MicroStrategy invested a massive $425 million from its treasury fund. Later, Jack Dorsey-backed Square Inc also invested $50 million i.e. 1% of its treasury fund in Bitcoin. “Those are two of the Fortune 1000 companies and I think there’s 998 left to go,” Estes said.
Working with several of its industry partners, Off The Chain worked out a few numbers with the possible investment capabilities in Bitcoin. Here’s what Estes has to say about it:
“There’s $4 trillion of treasury reserves at public corporations today. If just 1% of that moves into Bitcoin, that’s $40 billion. The multiplier effect for every dollar that goes into Bitcoin, Bitcoin goes up somewhere between $20 and $100 in market cap. If there’s $1 million in Bitcoin bought, the market cap of Bitcoin goes up between $20 million and $100 million.”
$1 Trillion Market Cap Is Conservative for Bitcoin
With respect to the above-mentioned multiplier effect, even if $40 billion of the institutional fund comes to Bitcoin, its market cap will multiple by 20x taking it to $800 billion. Thus, it will push the Bitcoin (BTC) market cap way past $1 trillion i.e. 4 times from the current levels. Thus, we can expect the BTC price to go above $50,000 in this scenario. Estes adds:
“If 1% of treasury reserves from public companies go into Bitcoin, Bitcoin is a trillion-dollar market cap, on the conservative side, and it could be a $5 trillion dollar market cap if we use the 100 number. That doesn’t count central banks and other institutions that may be coming in later on.”
Not only Estes, but other big market players and analysts are also betting on Bitcoin. JPMorgan’s Global Markets Strategy group recently noted that Bitcoin is slowing emerging as a strong alternative to Gold. It adds that if the trend continues, Bitcoin could easily “double or triple” from the current levels.
In its research note accessed by Fortune publication, the bank analysts wrote: “The older cohorts prefer gold, while the younger cohorts prefer Bitcoin as an ‘alternative’ currency. Even a modest crowding out of gold as an ‘alternative’ currency over the longer term would imply doubling or tripling of the Bitcoin price from here”.