JMP Securities has predicted that â€œ$1.5 trillion of incremental capitalâ€ could flow into bitcoin, an amount greater than the cryptocurrencyâ€™s current market cap. The firm sees more wealth management companies following Morgan Stanleyâ€™s example to offer bitcoin to their clients. â€œAround $30 trillion of assets in the U.S. retail wealth management industry currently do not have direct access to bitcoin,â€ he said.
$1.5 Trillion Could Flow Into Bitcoin, Analyst Says
San Francisco-based financial services firm with offices nationwide JMP Securities said last week that Morgan Stanleyâ€˜s move to offer wealthy clients exposure to bitcoin is the â€œtip of the icebergâ€ and could result in $1.5 trillion flowing into the cryptocurrency.
Devin Ryan is a managing director and equity research analyst covering investment banks, brokers, and asset managers at JMP Securities. He also serves as the firmâ€™s Head of Business Development. JMP Group is listed on the New York Stock Exchange under the symbol JMP.
Ryan explained in a note to clients that Morgan Stanleyâ€™s announcement will serve as a catalyst for other banks to follow suit. Morgan Stanley said last week that it will soon allow rich clients access to three bitcoin funds, making the firm the first major bank to do so.
The analyst noted that â€œAround $30 trillion of assets in the U.S. retail wealth management industry currently do not have direct access to bitcoin,â€ elaborating:
The price of bitcoin stands at $56,569 at the time of writing based on data from markets.Bitcoin.com. The cryptocurrencyâ€™s market cap is approximately $1.06 trillion. The BTC price rose almost 5% Wednesday, boosted by the news of Elon Muskâ€™s Tesla accepting bitcoin as a means of payment without converting into fiat currency.
Ryanâ€™s 5% allocation to bitcoin is not uncommon. This week, Mad Money host Jim Cramer recommended investors reduce their gold exposure and put 5% of their portfolios in bitcoin. Shark Tank star Kevin Oâ€™Leary also believes that a 5% allocation to bitcoin is optimal. Meanwhile, Jack Dorseyâ€™s Square Inc. currently holds 5% of its total cash reserves in bitcoin.
According to Ryan, â€œMotivations 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.â€
The analyst also predicts the same trend with wealth managers outside the U.S. He sees â€œsubstantial capital pools opening up, fueled by the same drivers, though dynamics vary by region,â€ Business Insider conveyed. While Ryan believes that the crypto industry is still in the â€œvery early innings of adoption,â€ he said:
What do you think about JMP Securitiesâ€™ bitcoin prediction? Let us know in the comments section below.
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