An increasing amount of Bitcoin is being accumulated by institutions. This much was made clear on Tuesday, when Stone Ridge Asset Management revealed to Forbes that it had picked up 10,000 BTC, representing one percent of its assets under management.
Investors think that further institutional adoption of the cryptocurrency could result in prices going parabolic.
How Bitcoin Could Explode Higher as More Institutions Adopt It
Bill Barhydt, CEO of Abra and a former employee of the CIA and Goldman Sachs, recently said that if only 5% of the liquid assets that the top nine firms in the S&P 500 own were to enter Bitcoin, it would surge:
“9 companies alone in the S&P 500 are sitting on close to $600 billion in cash and short term investments. 5% of that moving into #Bitcoin (or $30 billion) would likely 5x the price of Bitcoin given the lack of sellers. (3/6).”
At least 4% of #Bitcoin (probably more) is now locked up in long term holdings by institutional investors.
If you don’t get what’s about to happen then you’re just not paying attention.
Why does this matter? Read on… (1/6)
— Bill Barhydt (@billbarhydt) October 13, 2020
While this math may not add up in your mind, take fiat amplifiers into account. The amplifier is a concept that for every fiat dollar that is invested in Bitcoin or cryptocurrencies in general, the market capitalization of the space will grow than more than $1.
Estimates suggest that the fiat amplifier is anywhere from two to 25 times, depending on what phase of the market cycle cryptocurrencies are in.
In periods where investors are expecting upside, the fiat amplifier grows as investors don’t want to sell their coins too early.
Boosting Exposure to BTC
Barhydt’s analysis of the institutional adoption situation comes as he is seeking to increase his personal exposure to Bitcoin. As reported by Bitcoinist previously, he said that he is “considering doubling the allocation of #Bitcoin in my personal portfolio to 25%.”
Explaining why he thinks this is a good idea, he pointed towards inflationary trends:
“Given the acceleration of currency inflation and the likely price inflation to follow this seems like a better weighting than my current 12%.”
He added that the contacts he has spoken with say that returns in legacy markets such as equities are likely to be “muted in the next five years.” This trend may have the effect of driving capital into alternative assets that may be able to generate healthy returns such as gold and Bitcoin.
Thoughts on #Bitcoin allocation…
I'm considering doubling the allocation of #Bitcoin in my personal portfolio to 25%. Is this a good idea or is this allocation too high? (Thread…)
— Bill Barhydt (@billbarhydt) October 2, 2020
The comments he made are reminiscent of those made by a number of other investors in the space, who have dramatically increased their exposure to Bitcoin amid the ongoing macro backdrop. Raoul Pal, CEO of Real Vision, for instance, has over 50% of his liquid net worth in Bitcoin.
Photo by Caleb Riston on Unsplash Price tags: xbtusd, btcusd, btcusdt Charts from TradingView.com How Bitcoin Could Surge 500% Amid Rising Institutional Adoption