- Bitcoin experienced a turbulent beginning to the year.
- Despite some short-term negativity, significant institutional investors have expressed growing interest in the cryptocurrency.
- This buying pressure could easily propel Bitcoin to reach new all-time highs, according to Standard Chartered.
Bitcoin is projected to soar to $500,000 by the conclusion of US President Donald Trump’s current term.
This forecast comes from Standard Chartered’s Global Head of Digital Assets Research, Geoff Kendrick, who anticipates an influx of sovereign wealth funds and pension funds joining the rally initiated by hedge funds last year.
The introduction of exchange-traded funds in 2024 has significantly broadened access to Bitcoin, providing a consistent support factor for the asset leading up to Election Day. Michael Saylor’s proactive Bitcoin acquisitions also played a role in pushing Bitcoin to its all-time high of around $108,000 in December.
However, the cryptocurrency has struggled to maintain stability above the $100,000 mark since then.
Kendrick believes this trend may change with the addition of new investors.
ETFs’ inaugural year
A review of the most recent end-of-quarter 13F disclosures — mandatory for firms managing over $100 million in assets — provides insights into the major trends during the inaugural year of Bitcoin ETFs.
Hedge funds continue to lead in Bitcoin purchases, closely followed by investment advisors. In the third quarter, banks began acquiring Bitcoin, and their activity has steadily increased. With the repeal of SAB 121, this trend might escalate further.
Future outlook
“Additional buyers are poised to enter the market,” Kendrick noted.
As these prominent institutions incorporate Bitcoin into their balance sheets, a decrease in overall asset volatility is expected.
This, Kendrick argues, will lead to a broader impact for investment managers, enabling them to allocate a higher percentage of their portfolios to Bitcoin, resulting in increased demand.
Among the new investors Kendrick mentions will be some of the largest global entities: pensions and sovereign wealth funds.
Some, such as those from Abu Dhabi, have already invested in the cryptocurrency. Although only two pension funds have entered the Bitcoin market — the State of Wisconsin Investment Board and the State of Michigan Department of the Treasury, according to Kendrick — these are among the most well-capitalized institutions available.
“In the future,” Kendrick stated, “we expect to see more long-term-only investments,” while the participation from sovereign funds, such as that from Abu Dhabi, is anticipated to increase significantly.
Andrew Flanagan is a Markets Correspondent for DL News. Have a tip? Contact [email protected].
