If pension funds and insurance companies in the US, euro area, UK and Japan allocate 1% of assets to the most popular cryptocurrency, bitcoin (BTC), that would result in additional BTC demand of USD 600bn, strategists at JPMorgan said.
However, these investors face regulatory hurdles relating to risk levels and liability mismatches, likely limiting how much they can put into BTC, Bloomberg reported, citing a note by the strategists.
As reported last week, America’s Massachusetts Mutual Life Insurance (also known as MassMutual) has purchased USD 100m worth of bitcoin to add to its general investment fund. MassMuttual’s holdings are now 0.04% held in BTC, but the firm also moved to also snap up a USD 5m minority equity stake in NYDIG, a Stone Ridge-run subsidiary firm that provides crypto services to institutional investors.
Should the above-mentioned pension funds and insurance companies in the US, euro area, UK and Japan also allocate 0.04% of their assets to BTC, that would mean additional demand of USD 24bn. Today, BTC’s market capitalization is around USD 355bn.
“One can see the potential demand that could arise over the coming years as other insurance companies and pension funds follow MassMutual’s example,” according to the strategists at JPMorgan.
Meanwhile, on Friday, US-based business intelligence company MicroStrategy confirmed it raised USD 650m by selling convertible senior notes due 2025 in order to buy more BTC.
After a rally on Sunday, BTC trades at USD 19,111 (05:14 UTC) and is up by 1% in a day, trimming its weekly losses to less than 1%. The price rallied by 18% in a month and 169% in a year.
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