According to a report by Ark Invest, if corporations convert just 10% of their cash reserves to Bitcoin the price of the number one digital asset could surge to $535,000.
In its latest report, in a section called “Bitcoin: Preparing for Institutions,” investment firm Ark Invest stated that even a tiny 1% allocation from S&P 500 companies would increase BTC/USD spot prices by $40,000.
“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,” the report reads.
The firm further expands on the longer-term impact that corporations could have on Bitcoin’s scarcity, Ark predicting that their probable allocations into the cryptocurrency would far surpass just 1%.
“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,” the report said. Adding:
“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.”
Although, data from crypto news and analysis company The Block shows that hedge funds are short Bitcoin by more than $1 billion. Michael Bucella of BlockTower Capital has said though that institutions have jumped into the market in droves.
“There is a large and emerging group of institutions that have an enormous capital base that are reallocating to this space,” Michael Bucella, who works at investment firm BlockTower Capital, told CNBC this week. He added, “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.”
Ark Invest CEO, founder, and CIO Cathie Wood, told Yahoo Finance that she doesn’t agree that Bitcoin has reached its new all-time peak fo the cycle.
“We believe that the institutional behavior and moves recently have been fascinating,” she told Yahoo Finance Presents. “We have been expecting institutions to start moving into Bitcoin and other crypto assets, but primarily Bitcoin, the most secure of the blockchains. Because if you look at the correlation of Bitcoin’s performance relative to any other asset class, it has the lowest correlation, meaning if you buy some Bitcoin, you will further diversify your portfolio and increase your returns with lower risk.”
If that’s not enough to get you bullish, Microstrategy CEO Michael Saylor plans to host a corporate Bitcoin conference this week, where “thousands of executives, officers and directors and advisors of corporations,” according to Saylor.
The event titled “Bitcoin For Corporations” could see hundreds or thousands of corporations piling into Bitcoin. As a side note prior to the historic conference, Microstrategy has announced another purchase of Bitcoin. This time the firm bought an additional $10 million dollars worth of the number one cryptocurrency. That puts Microstrategy at a holding of at least 70,000 Bitcoin or $1.1 Billion after its Bitcoin-buying spree last summer and winter. Saylor, who has been outspoken about Bitcoin ever since his company decided to make the cryptocurrency its primary Treasury reserve asset.
Saylor plans to release his own companies plans and strategies regarding how he was able to invest so much in Bitcoin. This is noteworthy due to the fact that his company has already helped inspire many other institutions to get involved in the Bitcoin market.
Besides Saylor, top executives from the crypto industry have also pledged that they will attend the event next week. Some of the big names include Grayscale CEO Michael Sonnenshein, Stone Ridge Asset Management Chief Executive Ross Stevens, Coinbase’s head of institutional sales Brett Tejpaul, Fidelity Digital Assets, Kraken CEO Jesse Powell, Gemini’s chief of business development Dave Abner and many more people.
Bitcoin is currently trading at [FIAT: $35,667.35] UP +6.4% in the last 24 hours according to Coingecko at the time of this report.