Bitcoin may surpass a market capitalization of $1 trillion provided that institutional investors join the market and invest a low-single-digit portfolio percentage to BTC.
On June 23, the Messari crypto research firm predicted that Bitcoin could rise to $50,000 in the coming years. However, that would happen only if institutions invest a low-single-digit portfolio percentage to BTC. One executive from Messari, Ryan Watkins has looked at these numbers and says that if institutions just set aside 1% of their portfolios and invest in bitcoin, the bitcoin market cap could surpass $1 trillion.
Watkin’s study aimed to calculate the effect on the bitcoin price of institutions by closely following Paul Tudor Jones’ example of placing a low single-digit percentage into Bitcoin. Paul Tudor Jones is a famed hedge fund manager who proposed this investment approach to the Bitcoin market.
$1 Trillion Market Cap Is Possible
Based on the researcher’s forecast, a small percentage allocation from family offices, endowments & foundations, pension funds, and sovereign wealth funds to bitcoin would introduce a staggering $480 billion in new money to the Bitcoin markets.
What would it look like if institutional investors followed Paul Tudor Jones and allocated a “low single-digit percentage” to #Bitcoin?
Here’s what we found using our best estimates of global inst. investor AUM.
TL;DR?
Hundreds of billions if not trillions $ in inflows
— Ryan Watkins (@RyanWatkins_) June 23, 2020
Digital assets researcher Chris Burniske published a report that discovered fiat flows into cryptocurrency to normally drive price gains. In most cases, the gains were of 2-25 times in the 2017 bull trend.
5/ If instead we have averaged 50K new users per day w/ $1,750 deployed per user, then #cryptoasset appreciation more in 4x range per new $ pic.twitter.com/dhAfvcAzfz
— Chris Burniske (@cburniske) September 20, 2017
Which Institutions Will Lead in Bitcoin Adoption?
Even though Watkins thinks that Bitcoin may not eventually need institutions for it to succeed. “If Bitcoin is to become a globally adopted non-sovereign store of value; it will need to convince institutional investors to transfer wealth into the asset,” explained he.
Nonetheless, Watkins looks at hedge funds as the possible leaders of the institutional charge into cryptos. On his part, Ryan Radloff, the CEO of multi-billion custodian Kingdom Trust, has other ideas. He thinks that the $28 trillion United States retirement industry will be the key player. He thinks the retirement sector will take the lead as consumers demand the ability to put in some digital assets into their retirement portfolios.
Other researchers think that institutions will join the nascent crypto market through the increasingly sophisticated and regulator-friendly innovations happening within the crypto sector. In that context, Jay Fraser from BOX Digital Markets predicts considerable institutional engagement with the rapidly growing security token space.
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