The price of bitcoin has seen a stunning rally in 2020. The coin rose from $ 3,600 in March to over $ 19,000 in December. JPMorgan analysts say bitcoin can expect a $ 600 billion catalyst in the long run, which could give the price another boost.
According to a note from JPMorgan strategists, a 1% allocation from pension funds and insurance companies in the United States, the Eurozone, the United Kingdom and Japan would amount to about $ 600 billion.
At the moment, bitcoin's market capitalization is around $ 350 billion. If there were an influx of buyers that exceeds the current valuation in the coming years, the likelihood of exponential growth would increase significantly.
The optimistic stance on bitcoin comes after MassMutual bought $ 100 million worth of bitcoin. MassMutual is one of the largest insurance companies in the United States. The conglomerate has more than $ 675 billion in assets under management.
MassMutual's investment is a very positive thing for bitcoin's future. It could set precedent in the insurance and pension fund industry to embrace bitcoin as a legitimate asset to house their reserves.
Bitcoin is a special asset because it can have a dual function. The currency can be used as a store of value but also as a protection against inflation. In addition, investors are still exposed to exponential growth.
Usually inflation hedges are used to protect a portfolio against downside risks such as some type of insurance. The main purpose is not to make a profit but to protect the portfolio when market sentiment changes.
While the price of bitcoin can still experience significant swings in the short term, the long-term outlook remains very bright. One reason for this is the significant valuation difference with gold.
Bitcoin is still in a nascent growth phase as there is a valuation gap between the digital currency and gold. The gold market is valued at $ 9 trillion and bitcoin accounts for less than 4% of this.
Source: Forbes
According to a note from JPMorgan strategists, a 1% allocation from pension funds and insurance companies in the United States, the Eurozone, the United Kingdom and Japan would amount to about $ 600 billion.
At the moment, bitcoin's market capitalization is around $ 350 billion. If there were an influx of buyers that exceeds the current valuation in the coming years, the likelihood of exponential growth would increase significantly.
The optimistic stance on bitcoin comes after MassMutual bought $ 100 million worth of bitcoin. MassMutual is one of the largest insurance companies in the United States. The conglomerate has more than $ 675 billion in assets under management.
MassMutual's investment is a very positive thing for bitcoin's future. It could set precedent in the insurance and pension fund industry to embrace bitcoin as a legitimate asset to house their reserves.
Bitcoin is a special asset because it can have a dual function. The currency can be used as a store of value but also as a protection against inflation. In addition, investors are still exposed to exponential growth.
Usually inflation hedges are used to protect a portfolio against downside risks such as some type of insurance. The main purpose is not to make a profit but to protect the portfolio when market sentiment changes.
While the price of bitcoin can still experience significant swings in the short term, the long-term outlook remains very bright. One reason for this is the significant valuation difference with gold.
Bitcoin is still in a nascent growth phase as there is a valuation gap between the digital currency and gold. The gold market is valued at $ 9 trillion and bitcoin accounts for less than 4% of this.
Source: Forbes