Long Beach(CoinChapter): Financial services firm JMP Securities predicts that $1.5 trillion of “incremental capital” could flow into Bitcoin. This would be more than the cryptocurrency’s current market cap.
Additionally, the firm sees more wealth management companies following the lead of Morgan Stanley. Last week Morgan Stanley announced that they would allow access to three Bitcoin funds to its wealthy clients, becoming the first major bank to do so. JMP Securities sees this as just the “tip of the iceberg” however.
Managing director Devin Ryan explained as much in a note to the firm’s clients. He believes Morgan Stanley will be a catalyst for other banks to follow suit. “Around $30 trillion of assets in the U.S. retail wealth management industry currently do not have direct access to bitcoin,” Ryan noted.
“Making some assumptions, with relatively modest asset allocation exposure of 5% of a portfolio, this alone would represent $1.5 trillion of incremental capital into bitcoin, which is greater than its current market cap.”
The 5% number is not an uncommon one amongst many investors. Mad Money host Jim Cramer recently suggested investors put 5% of their portfolios into Bitcoin. Likewise, Shark Tank star Kevin O’Leary also viewed that percentage as an optimal one for Bitcoin investment. To that point, Square Inc. currently holds 5% of its total cash reserves in Bitcoin.
What Will Motivate Wealth Managers To Turn To Bitcoin
Ryan also discussed what he believes will motivate wealth managers to turn to Bitcoin in the note. “Motivations range from missing the opportunity at best, or at worst, seeing business disruption if clients decide better alternatives exist, which could negatively impact growth or competitive positioning,” he added.
He also sees the same thing happening outside of the United States. While he believes dynamics will vary by region, Ryan sees “substantial capital pools opening up.” Ryan also that the crypto industry as a whole remains in the early stages of adoption.
The current price of Bitcoin is $56,569 at the time of writing. Its market cap is approximately $1.06 trillion. The price rose 5% due to news of Tesla accepting Bitcoin as a means of payment without converting into fiat.