Adam Sharp

Institutional Investors Likely to Grapple With Crypto FOMO

Back in December 2020, I wrote the following in “Institutional Bitcoin Is Here to Stay:”

Insurance giant MassMutual announced last week that it had purchased $100 million worth of BTC. It also took a $5 million equity stake in New York Digital Investment Group (NYDIG), a digital asset management firm.

MassMutual is one of the largest insurers in the U.S. It has 5 million customers and has been around since 1851. 

Even JP Morgan analysts were impressed by the MassMutual news, writing the following (emphasis mine)…

“MassMutual’s bitcoin purchases represent another milestone in the bitcoin adoption by institutional investors… One can see the potential demand that could arise over the coming years as other insurance companies and pension funds follow MassMutual’s example.

Bitcoin’s price was around $18,000 back then and is now at around $47,000. MassMutual’s bet has done quite well. 

But MassMutual’s $5 million equity investment in NYDIG might be doing even better. NYDIG is a hugely influential institutional bitcoin firm. It offers custody, buying, funds and much more. 

This week Wells Fargo announced that it is offering bitcoin to wealthy clients through a partnership with NYDIG. JPMorgan also partnered with NYDIG to offer bitcoin to its upper-crust clients.

And now MassMutual has partnered with NYDIG to offer bitcoin to its brokerage team professionals. Here’s an excerpt from MassMutual’s press release

“As MassMutual explores ways to integrate cryptocurrency into different areas of its business, MMLIS saw a growing demand from our financial professionals and their clients to gain bitcoin exposure,” said Daken Vanderburg, Head of Investments at MML Investors Services…

“MassMutual continues to innovate and to lead the pack when it comes to bitcoin,” added Robert Gutmann, co-founder and CEO of NYDIG. 

“It was one of the first companies to announce an allocation to bitcoin, and has served as a powerful strategic partner. MMLIS is one of the largest wealth management firms in the country. We are excited to partner with the MMLIS team to provide its financial professionals and investors with access to bitcoin exposure.”

Big money managers are finally catching on. They’ve moved past the “try to beat ‘em” phase and are on to the “join ‘em” part of the operation.

Institutional FOMO 

The institutional investors who invested early in blockchain and crypto are killing it. And their peers have surely noticed by now.

So I think we’re going to see an institutional pile-on into bitcoin and other cryptos. Outperformance is like a virus in the institutional world. Everyone shifts into whatever’s outperforming. And right now, that’s crypto. 

I think bitcoin will be the primary beneficiary of the continuing institutional boom. Once institutional investors get comfortable with bitcoin, many will be drawn to altcoins as well. However, for the more conservative firms, getting comfortable with altcoins (and getting board approval to invest in them) will take many years. 

For that reason and others, I believe bitcoin is the best and safest bet in crypto right now. And I expect it to hit new all-time highs within the next year. 

Enjoy your weekend!