After zipping past $9,600 yesterday, the bitcoin bulls seem to have run out of steam as the crypto has dipped to $9,383.44 at press time. This means that BTC remains stuck within its macro trading range below the psychologically important $10,000 level. The $10K level has proved a tough nut for the bulls to crack in recent weeks.
For crypto analytics firm Messari, institutional investment is the one prime 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 shattering $50,000 if the institutional investors allocate just 1% of their portfolio to the flagship crypto.
Institutional Investors Taking Bitcoin Into The Stratosphere; Here’s How BTC Will Hit $50,000
Ryan Watkins, a researcher at Messari, analyzed what would happen to the bitcoin price if institutional investors took a page from hedge fund manager Paul Tudor Jones’s book and invested a “low single-digit percentage to bitcoin.”
In a comprehensive article published on June 23, Watkins observes that institutional money is viewed as the gateway to bitcoin’s multi-trillion-dollar valuation. If these high-rolling investors including endowments, pension funds, family offices, mutual funds, and hedge funds invested a small portion of their portfolio to bitcoin, billions of dollars in institutional money would flow to the crypto asset.
The analysis found that new money inflows into bitcoin historically boosted the price at least 2x-25x higher during the 2017 bull rally. As things stand, institutions taking a 1% exposure to bitcoin would push the price of the asset to $50,000.
“Depending on your assumptions, an aggregate 1% institutional allocation to Bitcoin can easily bring Bitcoin’s market cap above $1 trillion, or over $50,000 per BTC. This is why enthusiasts get so excited about the prospect of institutional inflows. 1% is a lot when everyone does it.”
Traditional Hedge Funds Will Be The First Institutional Movers
It should be noted that Watkins believes bitcoin may not need institutional investors to succeed. However, “success as a store of value is measured in price. And if bitcoin is to become a globally adopted non-sovereign store of value, it will need to convince institutional investors to transfer wealth into the asset,” he posited.
The cryptocurrency aficionado then points out a number of macro factors that will make bitcoin attractive to the ever so elusive institutional investors: the vast money-printing programs by central banks that are likely to result in high inflation and fiat debasement, the increasing reliance in digital money, and the overall decline in trust in financial institutions.
Watkins speculates that the traditional hedge funds will be the bellwether of institutional entry into crypto:
“Among the most likely to invest in Bitcoin are hedge funds, which have some of the most flexible investment mandates. Hedge funds can virtually invest in any asset class and financial instrument they agree to with their [limited partnerships].”