Even a small investment from insurance companies and pension funds could be significant for Bitcoin.
MassMutual’s $100 million purchase of Bitcoin (BTC) shows that demand for cryptocurrencies will continue to grow, according to strategists at major investment bank JPMorgan.
In a note to investors on 11 December, JPMorgan strategists, including Nikolaos Panigirtzoglou, said bitcoin adoption will now expand from family businesses and high-net-worth investors to larger investors, such as insurance companies and pension funds.
As Bloomberg reported, the experts said it was unlikely Crypto Revolt that insurance companies and pension funds would invest large amounts in Bitcoin. But even a small shift towards crypto could be significant.
If pension funds and insurance companies in the United States, the eurozone, the United Kingdom and Japan invested 1 per cent of their assets in bitcoin, bitcoin demand would grow by $600 billion, the strategists calculated. That is almost twice the market capitalisation of Bitcoin. This currently stands at 356 billion US dollars, according to data from CoinMarketCap.
The JPMorgan strategists wrote: „MassMutual’s Bitcoin purchases are another milestone in Bitcoin acceptance by institutional investors. […] One can see the potential demand that could emerge in the coming years as other insurance companies and pension funds follow MassMutual’s lead.“
Massachusetts-based insurance company MassMutual announced on 11 December the firm had bought 100m in bitcoin and added it to its general investment account. MassMutual told Cointelegraph that the investment was part of an overall strategy. The aim of this strategy, it said, was to „achieve measured but meaningful exposure to a growing economic aspect of our increasingly digital world.“
In addition to MassMutual, MicroStrategy, a large institutional firm, has also bought Bitcoin. The company announced it would raise $400 million in a securities offering to invest the money in BTC. MicroStrategy has made Bitcoin its primary asset after buying US$425 million worth of Bitcoin in August and September.