Appetites for bitcoin and various major cryptos are growing continuously. With these appetites for bitcoin allocations firmly present, different calculations indicate that even a small percentage of buy-ins from major corporations will have a massive effect on price action.
BTC can easily fetch a price tag of $535,000 if the corporate buyers convert about 10% of their cash reserves to the biggest crypto. In one of the multiple conclusions from its latest report, “Bitcoin: Preparing for Institutions,” invest firm ARK Invest stated that even a 1% allocation from the S&P 500 firms would be adequate to increase bitcoin prices by around $40,000.
Minimal Corporate Bitcoin Allocation: 2.55%
The discoveries from this study come amid institutional buying which seems to now focus on bitcoin as a long-term investment and alternative to cash. One attraction drew attention to the market after $500 million left Coinbase. The report reads:
“Based on search volumes compared to 2017, bitcoin’s price increase seems to be driven less by hype. With bitcoin appearing to gain more trust, some companies are considering it as cash on their balance sheets.”
ARK projects that possible allocations might far outstrip the 1% level with regards to the long-term effect that corporations might have on Bitcoin’s scarcity. The report read:
“Based on daily returns across asset classes during the past 10 years, our analysis suggests that allocations to bitcoin should range from 2.55% when minimizing volatility to 6.55% when maximizing returns. Based on ARK’s simulated portfolio allocations, institutional allocations between 2.5% and 6.5% could impact bitcoin’s price by $200,000 to $500,000.”
Deep Pockets Hypothesis Remains Mainstream
Despite the bitcoin price action failing to deliver a convincing continuation of its incredible bull run from December, tension is rising that the status quo might soon get turned on its head. According to previous reports, the Grayscale asset management giant may offer the spark that reignites the market as soon as February 3.
The general partner at BlockTower Capital, Michael Bucella, told CNBC:
“There is a large and emerging group of institutions that have an enormous capital base that are reallocating to this space. And if you think about the supply-demand model of a commodity, the supply curve is declining over time to effectively zero, and the demand is increasing exponentially.”
On February 8, in the meantime, the second-biggest crypto, Ether (ETH), will join bitcoin in seeing dedicated futures markets go live as from CME Group.