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Recently, Massmutual Life Insurance Company (Massmutual) announced that it has purchased $100 million worth of Bitcoin. Coincidentally, within a week, Bitcoin once again broke a new all-time high, reaching over $22,000.
Founded in 1851, Massmutual is one of the largest and most highly rated life insurance companies in the United States. It also made a $5 million equity investment in Nydig. Nydig is a Bitcoin-centric financial services company founded in 2017 and is a digital asset subsidiary of Stone Ridge Holdings Group. It also has a Bitcoin license and a limited purpose trust deed issued by the New York State Department of Financial Services. The $100 million in Bitcoin that Massmutual purchased for its general investment account was purchased through Nydig.
Nydig CEO Robert Gutmann commented: “We are proud of this incredible moment in the history of Bitcoin and the insurance industry.” “This reflects Bitcoin’s contribution to the general investment account of insurance companies. Extension.”
Tim Corbett, Chief Investment Officer of Massmutual, said: “We believe that owning Nydig’s shares and the Bitcoin position in our ordinary investment account will help us bring long-term value to policyholders.”
MassMutuals’ purchase of $100 million in Bitcoin is a drop in the amount of $235 billion in its investment account. But as an insurance institution with a history of 169 years, its actions may have a huge impact on mainstream investors’ perception of Bitcoin.
A recent report by JP Morgan Chase shows that institutional investors are increasingly recognizing Bitcoin. Although the price of Bitcoin has been fluctuating violently, the traditional market giants (MicroStrategy, Square and PayPal) have also begun to enter the digital asset market.
For example, MicroStrategy will issue senior convertible bonds worth US$650 million to buy more bitcoins and hold them for a long time.
Bitcoin investment institutions are growing at a faster rate. In this sense, Nikolaos Panigirtzoglou, an analyst at JPMorgan Chase, believes that institutional investment in Bitcoin “has just begun.” Bitcoin only accounts for 0.18% of family financial investment. In contrast, gold ETF accounted for 3.3%. Therefore, changes in the allocation of funds will bring “billions of dollars” to Bitcoin.
The JPMorgan Chase report pointed out that the three key factors for financial institutions to switch to Bitcoin are: the “currency devaluation” of major economies, the new crown pneumonia pandemic and the US election.
Bitcoin has always been regarded as “digital gold” and has become more and more popular. Grayscale’s Bitcoin Trust will outperform gold in 2020. Grayscale’s product (GBTC) has achieved unprecedented success this year. Due to strong customer demand, the company has increased its digital asset funding to more than $12.2 billion.
Neil Ferguson, a senior researcher at the Hoover Institution at Stanford University, believes that Bitcoin is the best investment opportunity under the new crown pneumonia epidemic. He said: I will use Bitcoin. Bitcoin has performed well in the past year. It has grown by 175% this year and its price has exceeded $20,000. Gold has only gained 21% this year, while Bitcoin’s return is an order of magnitude higher.
Earlier, Ferguson expressed the view in his book “The Rise of Money” that if all the millionaires in the world collectively decide to hold 0.2% of their assets in Bitcoin, the price of Bitcoin will be $15,000. If it is 1%, then the price of each bitcoin will be $75,000. Therefore, as people take it as a new form of assets in a diversified investment portfolio, there is still a lot of room for growth.
Now institutions like Massmutual have begun to recognize and purchase Bitcoin as an important means of risk hedging, which will have a leading and exemplary role in the development of the industry and have a significant impact on the digital asset market.