A recent investment in Bitcoin by Massachusetts Mutual Life Insurance Co. highlights the potential for additional institutional demand for the cryptocurrency in coming years, according to JPMorgan Chase & Co.
The $100 million purchase suggests adoption of Bitcoin is spreading from family offices and wealthy investors to insurance firms and pension funds, JPMorgan strategists including Nikolaos Panigirtzoglou said in a note Friday.
The latter two are unlikely to ever make high allocations, but even a small shift toward the cryptocurrency could be significant, according to the strategists.
“MassMutual’s Bitcoin purchases represent another milestone in the Bitcoin adoption by institutional investors,” the strategists said. “One can see the potential demand that could arise over the coming years as other insurance companies and pension funds follow MassMutual’s example.”
If pension funds and insurance companies in the U.S., euro area, U.K. and Japan allocate 1 percent of assets to Bitcoin, that would result in additional Bitcoin demand of $600 billion, the strategists said.
The cryptocurrency’s current market capitalization is about $356 billion, according to CoinMarketCap.
Bitcoin has dipped after hitting a record at the start of December but remains in sight of the $20,000 level.