JMP Securities expects $1.5 trillion to flow into Bitcoin

Wealth Management

Get ready for big money! JMP Securities has predicted that $1.5 trillion of incremental capital could flow into Bitcoin, an amount greater than the current market capitalization of the cryptocurrency.

The firm sees more wealth management companies following the example of Morgan Stanley to offer Bitcoin to its clients. The bank is only offering its wealthy clients exposure to the digital asset, but it is a start, believed to be the tip of the iceberg.

These are the words of Devin Ryan, a managing director and equity research analyst covering investment banks, brokers, and asset managers at JMP Securities. He also serves as the firm’s Head of Business Development.

Ryan explained in a note to clients that Morgan Stanley’s announcement will serve as a catalyst for other banks to follow suit, as the firm has become the first major bank to do so.

The analyst noted that around $30 trillion of assets in the US retail wealth management industry currently do not have direct access to Bitcoin, elaborating:

“Making some assumptions, with relatively modest asset allocation exposure of 5% of a portfolio, this alone would represent $1.5 trillion of incremental capital into bitcoin, which is greater than its current market cap.”

His 5% allocation to Bitcoin is not uncommon.

Mad Money host Jim Cramer has recommended investors to reduce their gold exposure and put 5% of their portfolios in Bitcoin. Jack Dorsey also has Square holding 5% of its total cash reserves in Bitcoin.

According to Ryan, motivations range from missing the opportunity at best, or at worst, seeing business disruption if clients decide better alternatives exist. This, in turn, could negatively impact growth or competitive positioning.

The analyst also predicts the same trend with wealth managers outside the US, echoing his belief that the crypto industry is still in the very early innings of adoption.


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