December 14, 2020 - Last Thursday, 169-year old life-insurance company MassMutual announced that it had made a $100 million investment in Bitcoin in its general investment account. On the same day MassMutual also declared that it had taken a minority stake, valued at $5 million, in NYDIG, "a leading provider of institutional investment and technology solutions for Bitcoin". MassMutual's purchase of Bitcoin was facilitated by NYDIG with the life-insurance firm's position now held on NYDIG's custody platform.
As reported by Bloomberg, this was followed on Friday by JPMorgan strategists issuing a note stating that the investment by MassMutual can be read as the beginning of potential demand for Bitcoin from traditionally conservative buy-side institutions . This could propel demand for Bitcoin to unprecedented levels.
According to JPMorgan's strategists, including Nikolaos Panigirtzoglou, the vote of confidence in Bitcoin by a long-established insurance firm suggests that interest in Bitcoin is rolling out beyond family offices and wealthy investors, to being more widely adopted as an asset-class by insurance firms and pension funds.
“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.”
According to JPMorgan's strategists, if pension funds and insurance firms in the US, the Euro area, UK, and Japan allocate 1% of their assets into Bitcoin that would result in additional Bitcoin demand of $600 billion.
Although still perhaps widely considered a novel asset class to invest in, there is growing signs of adoption of cryptocurrencies by big institutional names in banking and increasingly, the buy-side.
Just recently, Singaporean bank DBS has shown its interest in backing digital assets. Last week, the largest bank in SE Asia announced it would launch a cryptocurrency exchange in partnership with the Singapore Exchange. The project is designed to enable institutional investors and accredited investors to tap into a fully integrated tokenisation, trading, and custody environment for digital assets.
Another recent report by Coinshares stated that Institutional investors added $429 million into cryptocurrency funds and products for the week ended December 7, the second highest on record. The sector’s assets under management now stand at an all-time peak of $15 billion.
The world's largest crypto fund, Grayscale, had $336.3 million in inflows in the last week of November, after which it has lifted its assets under management to more than $12.4 billion, showing amassed inflows of $4.3 billion.
In November, a big name on Wall Street, Guggenheim Partners, filed with the US Securities Exchange Commission (SEC) so that its Macro Opportunities Fund could allocate up to 10% of its net asset value in Bitcoin, via the leading cryptocurrency manager Grayscale, in its Grayscale Bitcoin Trust.
In September, MicroStrategy boosted its portfolio with a Bitcoin purchase. The business intelligence and mobile software giant announced a significant bitcoin purchase worth $175 million, adding it to a previous investment into the prime cryptocurrency of $250 million.
On September 14, 2020, MicroStrategy completed its acquisition of 16,796 additional bitcoins at an aggregate purchase price of $175 million. To date, we have purchased a total of 38,250 bitcoins at an aggregate purchase price of $425 million, inclusive of fees and expenses.— Michael Saylor (@michael_saylor) September 15, 2020
Financial services company Square, headed by Twitter's CEO Jack Dorsey, also has big expectations for Bitcoin. In October, the firm announced a Bitcoin purchase worth $50 million, stating that, "cryptocurrency is an instrument of economic empowerment and provides a way to participate in a global monetary system, which aligns with the company's purpose." At the time, JPMorgan analysts stated that the purchase by Square was a, “strong vote of confidence for the future of bitcoin”
Today, @Square announced that it has purchased $50M in bitcoin. Square believes cryptocurrency is an instrument of economic empowerment and provides a way to participate in a global monetary system, which aligns with the company’s purpose. For more, visit https://t.co/HPhSMfVgac.— Square IR (@SquareIR) October 8, 2020
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