JP Morgan: Bitcoin acceptance by institutional investors has just begun
JP Morgan estimates billions of dollars will be transferred from gold to Bitcoin. MicroStrategy’s $ 650 million acquisition of BTC has yet to impact the market.
Corporate adoption of bitcoin is growing faster. Although the number one cryptocurrency moves in the range of $ 18,400 to $ 19,500, trying to break its all-time high resistance, it seems every week that a giant of the traditional market takes a long position in BTC. At least that’s what has happened in the last 6 months since the MicroStrategy, Square and PayPal announcements.
In that sense, JP Morgan analyst Nikolaos Panigirtzoglou acknowledges in a Re-report that corporate adoption of Bitcoin is “just beginning.” The analyst estimates that Bitcoin represents only 0.18% of the family offices investment. By comparison, gold ETFs represent 3.3%. Therefore, a change in the allocation of funds will bring “billions” to Bitcoin.
Researcher Tuur Demeester also touched on the $ 100 million purchase of BTC from insurance giant MassMutual. According to him, as Demeester points out, the announcement could create a domino effect similar to that of MicroStrategy:
”IF THE ENTIRE LIFE INSURANCE INDUSTRY WERE TO ALLOCATE JUST 0.1% OF ITS ASSETS TO BITCOIN AT CURRENT PRICES, THEY WOULD BE IN THE MARKET TO BUY 251,400 BTC FOR $ 4.5 BILLION, OR 1.35% OF THE CIRCULATING SUPPLY.”
JP Morgan’s report shows that three main factors are key to institutions switching to Bitcoin: the “devaluation of the currency” in major economies, the Covid-19 epidemic and the US election.
Grayscale’s Bitcoin Trust has outperformed gold throughout 2020, as shown in the picture below. Grayscale’s product (GBTC) has enjoyed unprecedented success this year, with the company increasing its funds in cryptocurrencies to over $ 12.2 billion due to strong demand from its customers.
Institutions ‘ bitcoin investment not priced
As reported by CNF, the company, led by Michael Saylor of MicroStrategy, made a risky stake. The company will issue $ 650 million worth of high-end convertible notes to buy more Bitcoins, in line with Treasury strategy. The initial offer was $ 400 million, but strong corporate demand allowed MicroStrategy to issue more debt.
Despite this, the price of Bitcoin has remained “sluggish” in recent weeks. Via Twitter, Nic Carter asked why there was no significant backlash in the market. As Carter says, whales often don’t disclose their purchases to take advantage of declining trends:
”THERE’S NO WAY TO GET $ 650 MILLION WORTH OF BTC WITHOUT MARKET INFLUENCE. [ … ] WE HAVE NEVER SEEN A WHALE PUBLICLY ANNOUNCE THAT THEY WILL TAKE A POSITION OF A CERTAIN SIZE. CLEARLY THE SUNDAY SHOULD CONTAIN THIS INFORMATION.”
My point is that the market needs to logically predict the market impact of the predicted Buy (which certainly won’t be zero), not that I expect Saylor to break up the ‘market buy‘ at Coinbase.
Carter did not reach a satisfactory conclusion about the apparent inaction of Bitcoin’s price in the face of the company’s acquisition. Some community members have expressed concern about Michael Saylor’s strategy, fearing the CEO is preparing to “leave” the market. But the MicroStrategy CEO said he plans to keep Bitcoin for years.