Could Institutional Demand See Bitcoin Cross the $50,000 Mark in 2021?
Bitcoin’s global reach continues to grow, as MassMutual invest $100 million in the prized crypto asset.
According to JPMorgan Chase & Co., if insurance companies and pension funds in the United States, the European Union, the United Kingdom and Japan allocate 1% of assets to Bitcoin, the move could open up a further demand of $600 billion in the cryptocurrency.
That said, regulatory hurdles may make matters complicated. Here is what MassMutual’s investment means for Bitcoin in the long run:
A rise in Bitcoin’s value
If insurance firms and pension funds do indeed invest in Bitcoin, the demand for the cryptocurrency will rise substantially.
To put it into perspective, Bitcoin’s current market capitalization is $624 billion at the time of writing.
According to Bloomberg analysts, institutional interest and growing demand could see Bitcoin’s price top the $50,000 mark this year and reach $1 trillion in market capitalization.
While many experts have predicted lavish prices before (and will continue to do so), institutional demand will see a firmer foundation of growth.
2021 has already seen Bitcoin reach heights never scaled before. Priced at $29,111 with a market cap of $541 billion on the 1st of January, Bitcoin reached an all-time high of $41,465 on the 8th of January, with a market cap of $771 billion.
The crypto asset was priced at $19,331 on the 1st of December 2020, with a market cap of $358 billion – less than half of the peaks (price and market cap) it reached in January 2020 – an additional demand of $600 billion could see the price of Bitcoin surge exponentially.
Conclusion - widespread belief that Bitcoin is the future
MassMutual’s investment hints at a radical change – Bitcoin is being looked at as a sound investment/reserve asset by big players.
For example, MicroStrategy, the world’s largest independent publically traded business intelligence (BI) company invested $250 million in Bitcoin, in the quest of maximizing long-term value for their shareholders.
While many investors still claim Bitcoin is a bubble bound to burst given its volatile nature, institutional demand will add more weight to the already secure mode of long-term investment.
Those who say Bitcoin is a bubble do not understand the financial implication of the term.
For now, Bitcoin is one for the present and the future. Buy Bitcoins at an exchange of your convenience, purchase a hardware wallet and reap the long-term benefits of a cryptocurrency asset worth your time and money.