Bitcoin (BTC) could sell for at least $ 535,000 if corporate buyers convert 10% of their cash reserves into the largest cryptocurrency.
In one of the several conclusions of its latest Bitcoin: Preparing for Institutes report, investment firm Ark Invest said that a 1% allocation to S&P 500 companies would be enough to raise BTC / USD spot prices by $ 40,000 increase.
Minimum BTC allocation by companies: 2.55%
The results come because institutional buyers continue to focus on Bitcoin as a long-term alternative to cash, with one transaction in particular drawing attention after $ 500 million left Coinbase.
“Based on search volume compared to 2017, Bitcoin’s price spike appears to be less of the hype. As Bitcoin appears to be gaining more trust, some companies are viewing it as cash on their balance sheets,” the report said.
In terms of the longer-term impact businesses could have on Bitcoin’s scarcity, Ark predicted that the likely allocations would likely far exceed the 1% level.
“Based on the daily returns of all asset classes over the past 10 years, our analysis suggests that the allocation to Bitcoin should be between 2.55% while minimizing volatility and 6.55% while maximizing returns,” she wrote, adding :
“Based on ARK’s simulated portfolio allocations, institutional allocations between 2.5% and 6.5% could affect Bitcoin price by $ 200,000 to $ 500,000.”
Deep pockets narration remains mainstream
Although the BTC price action has failed to deliver a convincing continuation of its bull run in recent weeks, there is growing expectation that the status quo will soon be turned on its head. As Cointelegraph reported, asset management giant Grayscale could set off the spark on Wednesday that will get the market going again.
“There is a large and emerging group of institutions with enormous capital bases that are reallocating themselves to this area,” Michael Bucella, general partner of the other investment firm BlockTower Capital, told CNBC this week.
“And when you think about the supply-demand model of a commodity, over time the supply curve drops to effectively zero and demand increases exponentially.”
On February 8th, the largest altcoin, Ether (ETH), along with Bitcoin, will see CME Group’s dedicated futures markets go live.