At the Reuters Global 2018 Investment Outlook Summit in New York, Billionaire Hedge Fund Legend and former Fortress Executive Mike Novogratz stated that institutional investors are close to adopting Bitcoin.
“When it’s that easy, the price of BItcoin or Ethereum is going to go much higher. And that is a lot closer than people think. The institutionalization of this space is coming. It’s coming pretty quick.”
$10,000 interim Bitcoin price target of Novogratz
Last month, Novogratz, who has shifted his funds and venture from the traditional finance sector to the cryptocurrency market, revealed his interim or mid-term price target of Bitcoin at $10,000.
The basis of the price target of Novogratz was established by several indicators including the Metcalfe’s law, a widely acknowledged metric which has been utilized to measure the growth rate of communication networks like Facebook, and the likelihood of the entrance of institutional investors and retail traders into the cryptocurrency market.
Over the past week, Bitcoin price has been extremely volatile, primarily due to the abrupt cancellation of the SegWit2x hard fork and the rise in popularity of Bitcoin Cash, which has become the main beneficiary of the SegWit2x hard fork termination.
But, Bitcoin price has been recovering with optimism surrounding CME Group’s launch of a Bitcoin futures exchange and the infrastructure Wall Street hedge funds, investment firms and exchanges have been building around Bitcoin to provide more liquidity to large-scale investors.
Earlier today on Nov. 14, Multicoin Capital Managing Partner Kyle Samani revealed that he had met with an institutional investor with a $30 bln fund. The investor disclosed the fact that fund managers within the company are restricted to issuing checks with the minimum value or $300 mln.
“More. Just met with an institutional manager. $30 bln fund. Minimum check size $300 mln. Current crypto allocation: $0. We aren’t even close to the top,” said Samani.
Previously, even up until early 2017, it was not possible for institutional investors to allocate hundreds of millions of dollars in Bitcoin because the market was premature and the liquidity was limited. In January of 2017, the market cap of Bitcoin was only $15 bln. The market was simply not deep and mature enough for institutional investors and large-scale hedge funds to commit.
In the past 10 months, the market valuation of Bitcoin has grown to $110 bln, with a daily trading volume of $4 bln. As such, Bitcoin has become more liquid than the most liquid stock on earth, Apple.
2018: expect mainstream adoption of Bitcoi
Ari Paul, the co-founder and CIO of BlockTower Capital, a cryptocurrency-focused hedge fund co-established by former Goldman Sachs vice president, stated “things are gonna get weird next year,” given that the interest for Bitcoin from the traditional finance industry and institutional investors is clearing increasing at an exponential rate.
As explained by Samani, institutional investors will be engaging in Bitcoin trading and enter the Bitcoin market with tens of billions of dollars in the short-term. Hence, analysts like Novogratz expect Bitcoin price to surpass the $10,000 mark with ease in the upcoming months, and potentially gear towards new all-time highs in late 2018, after achieving $10,000.
Since 2016, Bitcoin has successfully evolved into a robust and widely accepted store of value. As institutional investors participate in the market and liquidity of Bitcoin further increases, the value of Bitcoin will inevitably rise at an unprecedented rate in the mid to long-term.