After exceed $ 9,600 yesterday, the bitcoin bulls appear to have run out of steam when the cryptocurrency dropped to $ 9,300 at press time. This means that BTC remains stagnant within its macro trading range below the psychologically important level of $ 10,000. The $ 10K level has proven to be a tough nut for bulls to crack in recent weeks.
For cryptocurrency analysis company Messari, institutional investment is the main catalyst that could propel the digital asset to new all-time highs in the near future. In particular, Messari suggests that Bitcoin has a good chance of smashing $ 50,000 if institutional investors allocate just 1% of their portfolio to the flagship cryptocurrency.
Institutional Investors Could Easily Bring Bitcoin Price to $ 50,000
Ryan Watkins, a researcher from Messari, analyzed what would happen to the price of bitcoin if institutional investors took a page from the book of administrator of hedge funds Paul Tudor Jones and invest a "Low single digit percentage in bitcoin".
In a complete article Posted on June 23, Watkins notes that institutional money is seen as the gateway to bitcoin's multi-million dollar valuation. If these highly dynamic investors, including endowment funds, pension funds, family offices, mutual funds, and hedge funds, invested a small portion of their portfolio in bitcoin, billions of dollars in institutional money would flow into the asset cryptographic.
The analysis found that new money inflows into bitcoin historically raised the price by at least 2x-25x more during the 2017 rally. As things stand, institutions taking a 1% exposure to bitcoin would raise the price of the asset to $ 50,000.
Depending on your assumptions, an aggregate institutional allocation of 1% to Bitcoin can easily raise Bitcoin's market capitalization above $ 1 trillion, or more than $ 50,000 per BTC. That's why enthusiasts get so excited about the prospect of institutional entrances. 1% is a lot when everyone does it. ”
Traditional hedge funds will be the first institutional engines
It should be noted that Watkins believes that Bitcoin may not need institutional investors to be successful. However, “Success as a store of value is measured in price. And for Bitcoin to become a globally adopted non-sovereign store of value, it will have to convince institutional investors to transfer wealth to assets. ”, he claimed.
The cryptocurrency hobbyist points to a number of macro factors that will make Bitcoin attractive to such elusive institutional investors: the vast central bank money printing programs that are likely to result in high inflation and fiduciary degradation, the increasing dependence on digital money, and the general decline in confidence in financial institutions.
Watkins speculates that traditional hedge funds will be the benchmark for institutional entry into cryptocurrencies:
“Among the most likely to invest in Bitcoin are hedge funds, which have some of the most flexible investment mandates. Hedge funds can invest in virtually any asset class and financial instrument that they agree with their (limited companies). ”