- Bitcoin has had a choppy start to the year.
- Despite short-term pessimism, some of the largest institutional buyers have shown increasing interest in the asset.
- That buy pressure can easily send Bitcoin to new all-time highs, says Standard Chartered.
Bitcoin will rise to $500,000 by the end of US President Donald Trump’s current term.
That’s according to Standard Chartered’s Global Head of Digital Assets Research Geoff Kendrick, who predicts that more sovereign wealth funds and pension funds will pile into the rally that hedge funds kicked off last year.
The launch of exchange-traded funds in 2024 greatly expanded access to Bitcoin, providing a persistent tailwind for the asset that continued through Election Day. Michael Saylor’s aggressive Bitcoin purchases also helped send Bitcoin to an all-time high of about $108,000 in December.
However, the token has failed to hold above $100,000 reliably ever since.
Kendrick sees that changing with a confluence of new buyers.
ETFs’ first year
Going over recent end-of-quarter 13F disclosures — required from firms with over $100 million in assets under management — reveals a breakdown of the big movers across the Bitcoin ETFs’ first year.
Hedge funds still lead Bitcoin buying, with investment advisers close behind. Banks began to scoop up Bitcoin in the third quarter, and that activity has steadily ticked upward. With the repeal of SAB 121, this may further increase.
Looking forward
“Other buyers are waiting to step in,” Kendrick wrote.
As these large institutions add Bitcoin to their balance sheets, there should be a resultant reduction in overall volatility for the asset.
That will have a knock-on effect for investment managers on a large scale, Kendrick argues, allowing them to more comfortably allocate a larger percentage of their books to Bitcoin, driving up purchasing.
Some of the new buyers Kendrick references will be the largest in the world: pensions and sovereign wealth funds.
Some, like Abu Dhabi, have already purchased the token. And while only two pensions have bought Bitcoin — the State of Wisconsin Investment Board and the State of Michigan Department of the Treasury, according to Kendrick — they are, of course, some of the most well-capitalised institutions out there.
“Going forward,” Kendrick wrote, “we would expect more very long-term-long-only money” while Abu Dhabi kickstarts “much greater participation by sovereigns.”
Andrew Flanagan is a Markets Correspondent for DL News. Got a tip? Email aflanagan@dlnews.com.