The multibillion US bank has made snide comments about Bitcoin in the past, but its tone is changing.
JPMorgan: MassMutual purchase a “milestone”
In a recent report to clients last week, JPMorgan analysts said institutional demand for Bitcoin was providing a compelling narrative for the digital asset, terming the recent bets by several firms to be a “milestone” in the decade-old asset’s history.
JPMorgan has, since 2014, underplayed the rise of Bitcoin (and other cryptocurrencies) as a meaningful asset class and compared it to an elaborate Ponzi scheme instead. CEO Jamie Dimon even famously called Bitcoin “a fraud” in 2018, stating that those “stupid enough to buy it would pay the price” at the time.
But the narrative’s swiftly changing. Bank strategist Nikolaos Panigirtzoglou, who has previously produced crypto-centric reports for the firm’s clients, said last week that the recent $100 million purchase by legacy insurance firm MassMutual was a sign that traditional players were warming up to cryptocurrencies, a sign the asset class was maturing.
“MassMutual’s Bitcoin purchases represent another milestone in the Bitcoin adoption by institutional investors. One can see the potential demand that could arise over the coming years as other insurance companies and pension funds follow MassMutual’s example.”
Panigirtzoglou further suggested that the adoption of Bitcoin was taking place in family offices to wealthy investors, insurance firms, and pension funds. As CryptoSlate reported previously, Asian offices in Singapore and Japan were leading this trend.
Bitcoin to $1 trillion market cap?
The strategist said that while insurance firms and pension players were “unlikely to ever make high allocations,” a small interest and allocation of funds from them in the Bitcoin market could turn out significant.
Here’s the math for that. Bitcoin — despite its $350 billion market cap — remains a drop in the ocean compared to gold ($10 trillion), equities ($25 trillion), and bonds (over $50 trillion).
JPMorgan says #Gold will suffer for years because of #Bitcoin. Bank says investor adoption of Bitcoin has only just started. Gold ETFs are bleeding cash while Bitcoin funds absorb flows. https://t.co/JQPsMG311m pic.twitter.com/KQEU2jcbav
— Holger Zschaepitz (@Schuldensuehner) December 9, 2020
This means that even if pension funds and wealthy mutual funds players allocate just 1% of their net assets towards Bitcoin, over $600 billion at a minimum would find their way towards the asset class.
And that figure ignores any personal purchases made by retail crowds, derivatives players, or institutions (like MicroStrategy) buying spot Bitcoin.
However, not all is rosy. Traditional investing firms are at the mercy of strict regulations and law enforcement, meaning several regulatory concerns await a potential allocation.
But just 1% may change it all.
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