The wave of investors is expected to come in 2021
US bank JPMorgan Chase has issued a positive forecast for Bitcoin. For example, it expects insurance companies and pension funds around the world to invest $600 billion in Bitcoin over the next few years.
This was reported by Bloomberg, referring to the bank’s strategists. The statement was prompted by the recent investment by Massachusetts Mutual Life Insurance Co. The U.S. insurer had recently purchased bitcoin for USD 100 million.
600 billion USD for Bitcoin
Further, JPMorgan explained that if pension funds and insurers in the U.S., Europe, Japan and the U.K. invested just 1 percent of their assets in Bitcoin, $600 billion in new liquidity would come to the Bitcoin market. Currently, the Bitcoin market has a capitalization of $355 billion.
JPMorgan Chase strategists told Bloomberg:
The Bitcoin purchase by MassMutual [Massachusetts Mutual Life Insurance Co.] is another milestone in the adoption of Bitcoin by institutional investors. One can see the potential demand that could emerge if other insurers and pension funds follow MassMutual’s lead.
Billionaire and Bitcoin supporter Michael Novogratz had also welcomed the move by Massachusetts Mutual Life Insurance Co. He even called it “ perhaps the most important announcement in the Bitcoin space this year.“
The interest in Bitcoin
The reason for the increased interest is likely the current situation. Insurers and pension funds are finding it difficult to invest and diversify the money entrusted to them wisely. The companies depend on making profits for their existence.
Traditionally, U.S. insurers and pension funds like to invest their funds in U.S. bonds, i.e. U.S. government bonds. These generally still yield a useful 2 to 2.3 percent interest for long maturities. In the future, this will probably be sufficient at best to compensate for inflation. The necessary profits can probably not be achieved in this way.
The reason is the global intervention of central banks in the pandemic. It is to be expected that central banks all over the world will continue to make large sums of money available to the market, i.e. that the money supply will continue to increase substantially. Although it is disputed whether this must lead to consumer price inflation, there is in any case a threat of bubbles on the asset markets. Such bubbles are currently evident in almost all traditional asset classes and are making it difficult for companies to invest their money.