Bitcoin (BTC) has recently seen ample interest from a number of mainstream companies and persons, such as billionaire hedge funder Paul Tudor Jones. This could be the beginning 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 focused on blockchain and digital assets.
“I think eventually all corporate treasuries will have a small amount of their reserves in Bitcoin,” Estes told Cointelegraph in an interview.
A growing number of companies are looking to Bitcoin as part of their treasury fund equation. Two of the latest entrants to the Bitcoin ecosystem, MicroStrategy and Square, recently bought approximately $425 million and $50 million worth of BTC respectively. “Those are two of the Fortune 1000 companies and I think there’s 998 left to go,” Estes said.
Collaborating with a number of its partners, Off The Chain crunched a few numbers based on hypothetical scenarios, matching each company’s presumed investment capability with possible Bitcoin purchases. “There’s $4 trillion of treasury reserves at public corporations today,” Estes said. “If just 1% of that moves into Bitcoin, that’s $40 billion.”
“The multiplier effect for every dollar that goes into Bitcoin, Bitcoin goes up somewhere between $20 and $100 in market cap,” Estes explained. “If there’s $1 million in Bitcoin bought, the market cap of Bitcoin goes up between $20 million and $100 million.”
This multiplier effect relates to the availability of funds on order books across crypto exchanges, according to Fundstrat senior research analyst and director David Grider. “Reason you get this effect is, as in all markets, it’s the marginal liquidity at the edges that sets the price and value for the entire asset base,” Grider told Cointelegraph.
On the low end of the spectrum, multiplying the $40 billion estimate by twenty would boost Bitcoin’s market cap by $800 billion, Estes speculated. This would push Bitcoin’s market cap past $1 trillion, up from its current $222 billion evaluation.
“If 1% of treasury reserves from public companies go into Bitcoin, Bitcoin is a trillion-dollar market cap, on the conservative side, and it could be a $5 trillion dollar market cap if we use the 100 number,” Estes explained. “That doesn’t count central banks and other institutions that may be coming in later on.”