Crypto research firm Messari estimated a 1% allocation from institutions would drive the price of bitcoin to $50,000.
In a series of tweets published June 23, Messari research analyst Ryan Watkins outlined the impact of institutions following the legendary investor Paul Tudor Jones in allocating a “low single-digit percentage” to bitcoin.
What would it look like if institutional investors followed Paul Tudor Jones and allocated a “low single-digit percentage” to #Bitcoin?— Ryan Watkins (@RyanWatkins_) June 23, 2020
Here’s what we found using our best estimates of global inst. investor AUM.
Hundreds of billions if not trillions $ in inflows
According to Watkins, a small percentage allocation from institutions such as endowments, pension funds, and mutual funds would lead to the influx of hundreds of billions “if not trillions” of dollars in the crypto markets.
Watkins used the model proposed by crypto researcher Chris Burniske, which predicts that fiat inflow into crypto-assets drives price gains between two and twenty-five times.
What would this mean for the price of Bitcoin?— Ryan Watkins (@RyanWatkins_) June 23, 2020
As @cburniske previously outlined, flows into and out of an asset do not necessarily result in 1 to 1 moves in the price of the asset, and can be amplified into much larger price movements. https://t.co/eMwjZNIBAJ
Watkins estimated that an aggregate one percent allocation from all institutions would lead to bitcoin’s market capitalization “easily” reaching above $1 trillion, with the price appreciating to over $50,000.
Depending on your assumptions, an aggregate 1% institutional allocation to Bitcoin can easily bring Bitcoin’s marketcap above $1 trillion, or over $50,000 per BTC pic.twitter.com/8vogmvevWf— Ryan Watkins (@RyanWatkins_) June 23, 2020
Watkins concluded by saying that bitcoin did not need institutional investment to succeed, but the benefit to BTC’s price would ultimately assist the crypto-asset in becoming an established store of value.
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