JMP Securities predicts that “$ 1.5 trillion in fixed assets” could enter bitcoin, an amount higher than the current cryptocurrency capitalisation.
The company sees more wealth management companies following Morgan Stanley’s example and offering bitcoin to their customers. “About $30 trillion in assets in the retail wealth management industry do not currently have direct access to bitcoin.”
San Francisco-based financial services company JMP Securities announced last week that Morgan Stanley’s move to offer its wealthy customers bitcoin exposure is the “tip of the iceberg” and could lead to a $1.5 trillion dollar flow in cryptocurrency.
Devin Ryan is a managing director and stock analyst and covers investment banks, brokers and asset managers at JMP Securities. He also holds the position of head of business development of the company.
Ryan stated in a note to customers that Morgan Stanley’s announcement would serve as a catalyst for other banks to follow. Morgan Stanley announced last week that it would soon allow its wealthy customers access to three bitcoin Mutual Funds, making it the first major bank to make such a move.
Bitcoin’s market capitalisation is about $1.06 trillion. According to Ryan, sharing a 5% bitcoin in a portfolio is not unreasonable. Last week, Mad Money host Jim Cramer advised investors to reduce their exposure to gold and place 5% of their portfolios in bitcoin. Shark Tank star Kevin O’Leary also believes that the 5% share of bitcoin is optimal. Meanwhile, Square Inc. Jack Dorsey currently holds 5% of its total bitcoin reserves.
According to Ryan, “Motivation ranges at best from opportunity loss, or at worst, seeing business hurdles if customers decide there are better alternatives that could adversely affect growth or competitive position.”
The analyst also predicts the same trend for wealth managers on the rest of the planet. He believes that “significant reservoirs of capital are being opened, driven by the same incentives, although the dynamics of each region vary“, according to Business Insider. Although Ryan believes that cryptocurrencies are still in the “very early stages of adoption”, he said “the market signs we are watching are progressing as widely expected, which we believe is very optimistic.”