168-year-old MassMutual's marketing focuses on its history—thus ads with the oldest U.S. lighthouse, Boston Light—but it's buying BTC for the future (Photo: Pickist)
Bitcoin

U.S. insurance giant’s $100M BTC investment a milestone in institutional adoption: JPMorgan

A JPM Managing Director said if pension funds and insurers in the U.S., euro area, U.K., and Japan allocate 1% of assets to bitcoin, demand would grow by $600 billion; Mad Money’s Jim Cramer jumps in

By  / December 14, 2020 /

The recent hefty Bitcoin (BTC) investment by a United States insurance giant is an important milestone in the institutional adoption of the asset, according to J. P. Morgan Managing Director Nikolaos Panigirtzoglou.

In a recent note to investors, Panigirtzoglou said that the recent acquisition of $100 million worth of Bitcoin by United States-based insurance giant Massachusetts Mutual Life Insurance is a rather important event for the story of the asset, Bloomberg reported on Dec. 14. He wrote:

“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.”

The 169-year-old insurance firm with a yearly revenue of $29.6 billion announced that it acquired Bitcoin for its general investment fund of $235 billion. It’s the latest in a string of big institutional investors to follow MicroStrategy’s lead into the bitcoin market. This morning CNBC “Mad Money” host Jim Cramer revealed that he recently invested in bitcoin after the price dropped into the $17,000s.

MassMutual also acquired a $5 million minority equity stake in NYDIG, a subsidiary of Stone Ridge that provides cryptocurrency services to institutions. NYDIG co-founder and CEO Robert Gutmann commented:

“We are proud of this incredible moment in the history of both Bitcoin and the insurance industry. This reflects the expansion of Bitcoin to insurance company general investment accounts.”

Panigirtzoglou explained in the note that if pension funds and insurance companies in the U.S., euro area, U.K. and Japan allocate 1% of assets to Bitcoin, that would result in additional Bitcoin demand of $600 billion. Still, considering that the MassMutual only allocated only 0.04% of its general investment account in Bitcoin, 1% may be a quite optimistic outlook.

That being said, an increase of $600 billion in Bitcoin’s market cap would be very significant considering that the current value of all Bitcoin is under $357 billion, according to CoinMarketCap data.

That said, Panigirtzoglou admitted that traditional investors like insurers and pension portfolios face regulatory hurdles relating to risk levels and liability mismatches which are expected to limit their Bitcoin holdings.

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Adrian is a newswriter based out of Pisa, Italy. He's passionate about cryptocurrency, digital rights, IT, tech and futurology and likes to think about the future in a positive way.