The unexpected announcement that 169 year old Mass Mutual Insurance Company purchased $100 million in Bitcoin is a major milestone and a possible precursor to mainstream institutional adoption as the digital gold and alternative asset narrative take hold and as economic uncertainty and dollar weakness continue. A Mass Mutual spokesperson considers it a first step and its Bitcoin investment only represents .04% of its portfolio. However this news may be the most significant and most symbolic vote of confidence for Bitcoin to date. What institutional demand pressure on Bitcoin could this foretell?
JP Morgan analysts suggest that pension funds and insurers are starting to look to Bitcoin as a reserve asset and estimates that a 1% investment from global insurers and pensions from the US, UK and Japan would result in an additional $600 billion demand on Bitcoin. The Mass Mutual investment also seems to suggest that the regulatory and custodial challenges of investing in Bitcoin are lowering and allowing older and seemingly more conservative companies to invest.
More Institutional News & Perspectives
Although there has been recent talk of Bitcoin gradually replacing gold based on the data that shows greater inflows into Bitcoin, Coindesk’s Noel Acheson suggests that longer term data shows that gold is likely only showing temporary weakness and that the idea Bitcoin is rapidly replacing gold is premature. Acheson suggests, optimism about a vaccine and accommodative Federal Reserve monetary policy might be a bigger reason why institutional investors are rebalancing away from gold. However Acheson does point out the other compelling narrative that millennials could be driving the Bitcoin growth story because millenials are far more likely to invest in Bitcoin than gold and hence institutional investors who want to stay ahead of future demographic shifts will likely favor Bitcoin as well. Acheson also highlights Bitcoin’s use in corporate treasury as a reserve asset.
Lastly Acheson also highlights a number of significant recent institutional news for Bitcoin including:
- Morgan Stanley Investment Management’s chief global strategist positions bitcoin as a potential substitute for the dollar as a global currency.
- Bridgewater Associates founder Ray Dalio in a Reddit AMA mentioned cryptocurrencies were interesting “gold-like asset alternatives.”
- Fidelity Digital Assets is entering the crypto lending business,
- Spanish bank BBVA will soon launch cryptocurrency services, based out of Switzerland.
- Germany’s second-largest stock exchange, Borse Stuttgart, has revealed that its Bison crypto trading app exchanged €1 billion (US$1.21 billion) worth of crypto assets so far this year.