According to JPMorgan Chase, Massachusetts Mutual Life Insurance Co.’s recent investment in Bitcoin means there is potential for additional institutional demand for the largest cryptocurrency in coming years.
In its previous report, the analysts at the banking giant had said that the institutional adoption of Bitcoin has just begun.
As for the latest round of $100 million purchase by the 169-year old insurance behemoth, Bitcoin’s adoption is spreading from wealthy investors and family offices to insurance firms and pension funds, wrote the strategists including Nikolaos Panigirtzoglou.
Although pension funds and insurance firms are unlikely to make high allocations, the strategists said even a small shift could be significant for the cryptocurrency.
“MassMutual’s Bitcoin purchases represent another milestone in the Bitcoin adoption by institutional investors,” the strategists said.
“One can see the potential demand that could arise over the coming years as other insurance companies and pension funds follow MassMutual’s example.”
This bullish commentary for Bitcoin didn’t end here; the strategies went to say that if the insurance firms and pension funds in the US, UK, Japan, and Europe allocate just 1% of their assets into Bitcoin, that would see an additional $600 billion in Bitcoin demand.
Currently, the largest cryptocurrency has a market cap of $356 billion.
However, the JPMorgan strategies also wrote that the regulatory hurdles related to risk levels and liability mismatches could limit their Bitcoin allocation for these traditional investors.
Bitcoin is having a great time in 4Q20, in which it has rallied 78% while being up over 166% YTD. After the correction last week, Bitcoin started surging on the weekend, and currently, around $19,100, it is yet again ready to go for the all-time high.