Bitcoin (BTC) has recently gained a lot of interest from a number of companies and private individuals, such as the billionaire hedge company Paul Tudor Jones. This could be the start of a new wave of bitcoin buyers, according to Brian Estes, chief investment officer and managing partner at Off The Chain Capital, an investment firm specializing in blockchain and digital assets.
“Ultimately, I think all of the company’s Treasury bonds will contain a small portion of its Bitcoin reserves,” Estes told Cointelegraph.
A growing number of companies view Bitcoin as part of their equity equation. The last two players in the Bitcoin ecosystem, MicroStrategy and Square, recently bought BTC for $ 425 and $ 50 million, respectively. “These are two Fortune 1000 companies and I think there are still 998 companies left,” Estes said.
In collaboration with a number of its partners, Off The Chain provided several numbers based on hypothetical scenarios that matched each company’s perceived investment capacity with potential Bitcoin purchases. “Public companies today have $ 4 trillion in reserves of their own,” Estes said. “If only 1% of that amount goes to Bitcoin, that is $ 40 billion.”
Estes explained that “the multiplier effect for every dollar that goes into bitcoin, Bitcoin rises between $ 20 and $ 100 in market cap.” “If one million dollars of Bitcoin were bought, the market value of Bitcoin would increase from $ 20 million to $ 100 million.”
According to David Greider, chief analyst and director of Fundstrat, this multiplier effect is due to the presence of funds in order books on the cryptocurrency exchange. “The reason you get this effect is that, as with all markets, it is marginal liquidity at the edges that determines the price and value of the entire asset base,” Grider told Cointelegraph.
Estes said that at the lower end of the range, doubling the $ 40 billion valuation by twenty would increase Bitcoin’s market cap by $ 800 billion. This would push Bitcoin’s market cap to over $ 1 trillion, up from the current valuation of $ 222 billion.
“If 1% of our public company’s reserves were directed to Bitcoin, the market value of Bitcoin from a conservative standpoint would be trillions of dollars, and if we used 100, the market value could be $ 5 trillion,” Estes explained. … “It does not include central banks and other institutions that may come later.”