Institutional Bitcoin Is Here To Stay

It’s official. The institutional move into bitcoin is underway. Large multi-billion dollar firms are now coming into the market. And I think it’s just getting started.

Insurance giant MassMutual announced last week that it had purchased $100 million worth of BTC. They also took a $5 million equity stake in New York Digital Investment Group, a digital asset management firm.

MassMutual is one of the largest insurers in the U.S. It has 5 million customers and has been around since 1851

Even JP Morgan analysts were impressed by the MassMutual news, writing the following (emphasis mine).

“MassMutual’s bitcoin purchases represent another milestone in the bitcoin adoption by institutional investors… One can see the potential demand that could arise over the coming years as other insurance companies and pension funds follow MassMutual’s example.

Why is an insurance company buying bitcoin? Simple. Insurance companies like MassMutual have huge investment portfolios to pay out future claims with. Typically, bonds make up a large portion of these portfolios. But bonds don’t yield anything today because interest rates are near zero. So these guys need alternative investments. Bitcoin has a major upside. And it should offer some protection against inflation and monetary debasement, even with a small 1%-to-3% portfolio allocation.

Another big firm — Guggenheim Investments — just filed forms that would allow them to put up to 10% of their $5.3 billion macro fund into bitcoin. This follows other notable new large buyers such as Square and Microstrategy (more on that here).

And more big firms are getting into the crypto custody business. Banking services giant Standard Chartered is launching a crypto custody service. It will be one of dozens — or possibly hundreds — of firms catering to institutional crypto buyers.

Perfect Storm

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