Editor | Hao Fangzhou
Editor | Hao Fangzhou
The digital currency has entered a bear market for nearly a year, and the nearly two-month correction has brought positive sentiment to investors. The price recovery is affected by many factors:Prepare for new computing power during the wet season，SEC Passes Bitcoin ETF's April Fool's Joke，JPMorgan Chase launches stablecoin，Facebook Seeks Funding for Its Stablecoin Launch Plan，Litecoin is about to cut production……
However, the thrust of these events has not been strong enough. From the perspective of blockchain practitioners and digital currency investors, what is most worth looking forward to is the entry of huge funds.
In the long run, the advancement of regulatory technology and the improvement of infrastructure will generate impetus. Institutional investors will enter the game due to FOMO (Fear of Missing Out), which will further dilute the proportion of retail investors and catalyze the maturity of the market.
then when"When the market is ripe", how big is the plate? Where will the funds come from?
Many celebrities and institutions have tried to make predictions. for example,In 2018, Buffett, Bill Gates, Jack Ma and others predicted the death of Bitcoin. Another example,In July 2017, McAfee tweeted that, "In the next three years, your bitcoin will rise to 500,000 US dollars, if not, I will eat it live on national TV [undescribable]." (There is not much time left for him...)According to research by the World Economic Forum, by 2027 an estimated 10% of global GDP will exist "on-chain". According to the estimated global GDP of 80.68 trillion US dollars announced by the World Bank in 2017,The cryptocurrency market in 2027 will be at least $8 trillion. Odaily Research Institute believes that this number basically balances the "beautiful fantasy of people in the currency circle" and the "cruel reality" under supervision.
From the perspective of capital entry, according to the categories of traditional financial assets, pension funds, endowment funds, ETFs, insurance funds, and disposable assets of high-net-worth individuals can easily break through the existing ceiling of digital currency and bring nearly 8 trillion yuan to the market. Dollar.At the same time, we must also objectively and calmly realize thatThis number is still based on "ideal assumptions", that is, the above-mentioned assets exclude other investment temptations and choose digital currency as the target. Given the current high-risk and semi-mature status of digital currencies, don't expect too much from this possibility in the short term.
Next, let us first have a general understanding of the current market size and future growth space of cryptocurrencies through a graph.
Calculated based on cryptocurrency data on April 29, 2019,
The total value of existing cryptocurrencies accounted for 2.35% of the world's physical currency (0.17 vs 7.232, trillion US dollars);
Cryptocurrencies account for 0.19% of the value of all currencies in the world (0.17 vs 90.4 trillion USD);
The global stock market is 453 times larger than the cryptocurrency market (77 vs 0.17, trillion dollars);
The total value of mined gold is 85 times that of Bitcoin (7.9 vs 0.093, trillion USD);
Apple, the company with the largest market capitalization, is more than 10 times the total value of Bitcoin (0.96 vs 0.093, trillion US dollars).
According to the Center for Alternative Finance at the University of Cambridge《2ND GLOBAL CRYPTOASSET BENCHMARKING STUDY》, In the encryption market, only 35 million users are willing to pass the real-name verification of the exchange. There are 7.7 billion people in the world, of which Internet users account for 4 billion (52% of the population), and the encryption market users only account for 0.45% of the global population.
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Pensions: $76.2 billion to $4.14 trillion
Pension funds do not favor investing in cryptocurrencies. The reason is simple. Pension funds are known for their stability, while cryptocurrencies have both policy and volatility risks.
But starting in February 2019, things changed. Two pension funds with a combined management scale of US$5.1 billion in Fairfax County, Virginia, USA have invested in a venture capital fund with a management scale of US$40 million that focuses on the blockchain and digital asset industries.
According to statistics from the Investment Company Institute (ICI), as of the end of 2017, the total assets of pension funds in 22 major countries around the world were approximately US$41.4 trillion. Pension funds in many countries regard cryptocurrencies as an alternative investment strategy (Alternative Investment Strategy). According to a statement from the Fairfax Retirement System, cryptocurrencies account for 0.8 percent of the asset allocation of police pension schemes and 0.3 percent of employee pension schemes.
We refer to Fairfax’s statement, if pensions in 22 major countries around the world allocate 0.3% of cryptocurrencies, there will be $124.2 billion in entry; if the allocation ratio reaches 1%, the entry amount will reach $414 billion; If the allocation ratio reaches 5%, the admission amount will reach 2.07 trillion US dollars; if the allocation ratio is 10%, the admission amount will reach 4.14 trillion US dollars.
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Endowment: US$3.413 billion to US$34.128 billion
According to a survey conducted by Global Custodian and The TRADE, 94% of 150 endowments have invested in crypto projects during the past year’s bear market.
The endowment has the potential to become one of the important institutional investors in the crypto market. In the United States, university endowment funds are very developed, and private and public universities generally establish their own endowment funds. As of the end of 2017, there were more than 800 university endowment funds in the United States, with a total asset size of nearly US$566.8 billion. Among them, the assets of Yale University Endowment Fund and Harvard University Endowment Fund are about 27.2 billion US dollars and 37.1 billion US dollars respectively.
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ETFs: $84 billion to $336 billion
ETF is an open-end index fund that is traded on an exchange and has a variable fund share. It is also commonly known as an exchange traded fund (Exchange Traded Funds).
In July 2013, the world's first Bitcoin ETF that publicly applied to the US Securities and Exchange Commission (SEC) was proposed by the Winklevoss brothers. However, the proposal was rejected by the SEC because it failed to demonstrate its "prevention of fraudulent and manipulative practices" and "protection of investors and the public interest." In the following 5 years, the SEC has rejected 15 Bitcoin ETF applications.
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Insurance funds: USD 1.08 billion to USD 10.86 billion
On April 11, 2019, the French Parliament voted to pass the "Loi Pacte" bill, which indirectly allowed French insurance funds to invest in encrypted digital currencies. according toOECD (Organization for Economic Co-operation and Development)According to statistics, in 2017, the French life and comprehensive insurance asset management scale reached 2.3 trillion euros, of which "Collective Investment (CIS)" and "Other Assets (Others)" accounted for 21.4% in total. The earliest insurance capital cryptocurrency investment is possible Appears in both categories (private equity funds or publicly traded ETFs).
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Disposable assets of high-net-worth individuals: $3 trillion
The World Wealth Report 2018 published by Capgeminipointed out that the interest of high-net-worth individuals in cryptocurrencies has grown significantly. According to the report, 29% of respondents expressed high interest and 27% expressed general interest, with South American and Asian high-net-worth clients investing in cryptocurrencies as high as 59.7% and 51.6%, respectively.
At present, the asset scale of global high-net-worth individuals has reached 70 trillion U.S. dollars. According to the traditional concept of asset allocation, high-net-worth individuals generally allocate 5% to 10% of their total wealth in alternative assets. In 2018, this value reached 9.4%. We assume that in the future, cryptocurrency investment will account for 45% of alternative asset investments, then more than $3 trillion of wealth may flow into the cryptocurrency market.
In addition, the economic environment of some countries and regions can also bring greater capital and user volume to the cryptocurrency market.
For example, in 2018, Venezuela encountered inflation and an economic crisis, citizens sought refuge in cryptocurrencies, and the trading volume of cryptocurrencies skyrocketed.
On May 9 of the same year, Mohammad Reza Pourebrahimi, chairman of the Economic Committee of the Iranian Parliament, revealed that Iran had already flown out 2.5 billion U.S. dollars for the purchase of cryptocurrencies. In addition to helping facilitate economic transactions, cryptocurrencies can also circumvent U.S. sanctions, he believes.
According to Japanese media reports, on May 3, 2018, the margin ratio of foreign exchange margin trading in Japan will be reduced from a maximum of 25 times to a maximum of 10 times. Affected by this new regulation, a large amount of capital may flow into the cryptocurrency trading market.
