Digital assets have been sending messages for a long time, saying “institutions are coming”. Messari’s research analyst Ryan Watkins also explored how institutionalization of the digital asset space can be in terms of Bitcoin’s price association.
The analyst uses simple math to go to an expected market value (market value) and coin price. For the largest institutional investors, starting with managed assets (AUM), it is multiplied by the percentage of AUMs allocated to digital assets. The resulting figures can be summarized as “total demand” that will increase the market capacity of Bitcoin.
According to Watkins, the chart above; It shows that a corporate allocation of 1% to Bitcoin can easily increase the market value of Bitcoin to above $ 1 trillion or above $ 50,000.
An announcement earlier this week that PayPal and Venmo will start supporting Bitcoin transactions, similar to the Cash App, resulted in a price hike. Since Cash App started to support Bitcoin purchases in 2018, the revenue attributed to Bitcoin business has increased significantly every quarter.
Despite the potential for 300 million users of PayPal to offer new retail demand for Bitcoin, the figures offer a quieter response.
While Bitcoin’s market value is currently $ 168 billion, the amount PayPal will bring will be a maximum of $ 1.15 billion. So the potential increase will only result in a level of about $ 9,300 at the price level.
Despite the pessimistic analysis, the PayPal announcement offers more than a retail demand increase for the Bitcoin price. One of the largest payment processors in the world, entering the “Bitcoin business”; Thus, it sends a positive signal to institutional investors that digital assets such as Bitcoin are legitimate and deserve investment.
Therefore, although the PayPal agreement does not make much difference in the near term; It could potentially increase the institutional acceptance of Bitcoin in the future, which is a factor that will significantly increase the price.
The time shows whether the domino effect will take place or not.