14 Dec 2020 Jane Whitmoore
JPMorgan Expects $0.6 Trillion In Bitcoin Demand
One of the world’s largest investment banks, JPMorgan, published a research note, citing a potential increase in institutional demand for the world’s largest cryptocurrency – Bitcoin. The bank’s note comes amid mutual life insurance company, MassMutual, which purchased nearly 5,600 Bitcoin from its investment account. JPMorgan predicted that if the wave of institutional adoption continues, the demand for Bitcoin can reach $600 billion in the future.
Furthermore, MassMutual also bought a minority stake in the New York Digital Investment Group (NYDIG), which is a Bitcoin-focused financial services company. NYDIG managed to get a rapid growth over the past few years, and currently has $2,3 billion in cryptocurrencies under custody.
NYDIG believes that the partnership with MassMutual would bring them even greater exposure to institutional investors.
JPMorgan, on the other hand, also noted that “if family offices, insurance companies, and pension funds decide to allocate a small percentage to cryptocurrencies, it would result in massive demand.” However, the note, drafted by leading strategists including Nikolaos Panigirtzoglou, emphasized that insurance companies and pension funds are faced with regulatory hurdles in order to enter the crypto market.
“MassMutual’s Bitcoin purchases represent another milestone in the Bitcoin adoption by institutional investors. One can see the potential demand that could arise over the coming years as other insurance companies and pension funds follow MassMutual’s example,” JPMorgan elaborated in its note.
The banking giant expects the $600 billion demand to come from financial services companies from the US, EU, Japan, and the UK allocating at least 1% of their total assets in the top cryptocurrency.
However, Panigirtzoglou noted that the short-term outlook for Bitcoin may be skewed. Despite the short-term price uncertainty, the long-term outlook seems positive, as Bitcoin may receive a boost from the outflow of Gold ETFs.
“The contrasting institutional flow picture over the previous two months with inflows into the Grayscale Bitcoin Trust and outflows from Gold ETFs may become a structural trend, and the adoption of bitcoin by institutional investors has only begun,” Panigirtzoglou stated.
JPMorgan’s stance on cryptocurrencies shifted drastically, as in 2017, JPMorgan’s CEO Jamie Dimon called Bitcoin a fraud, threatening bank traders that they would lose their jobs if they are involved in Bitcoin trading.
“I would fire BTC traders in a second, for two reasons: It is against our rules and they are stupid, and both are dangerous,” Dimon stated in 2017.
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