In the latest episode of the podcast “The Bitcoin Layer,” Daniel Batten, a recognized advocate for Bitcoin, discussed the potential impact of sovereign wealth funds (SWFs) on the Bitcoin price, predicting a rise to over $148,000 per BTC should these funds decide to invest even a minimal fraction of their assets. With $35.7 trillion under management between SWFs and public pension funds, a 1% allocation could have a significant impact on Bitcoin’s valuation.
Batten’s analysis hinges on the sheer scale of assets managed by SWFs and public pension funds, noting that even a fractional investment compared to their total assets could have a profound impact on the market. He explained, “If a 1% deployment into Bitcoin were to happen, we can calculate based on the current ratio of dollar invested to market cap increase that it would lift Bitcoin price to over $148,000.”
Why Sovereign Wealth Funds Are Likely To Buy Bitcoin
The primary roadblock, according to Batten, is not a lack of interest but a lack of permissible investment frameworks within these funds, particularly concerning ESG (Environmental, Social, and Governance) criteria. “All of the Sovereign wealth funds want to invest into Bitcoin. It’s not through lack of want,” Batten quoted Kevin O’Leary, highlighting that these funds are currently constrained by their ESG investment committees. These committees are yet to be convinced of Bitcoin’s environmental credentials, which Batten believes are now significantly more positive than the general perception, marred by outdated information.
Batten suggested that the ESG criteria, which are a significant factor in investment decisions for SWFs, are based on data that is at least three years old, and no longer accurately reflects the current state of Bitcoin mining technology and its environmental impact. “There’s a massive knowledge asymmetry where the knowledge that we now have about Bitcoin and its environmental benefits is now so different to what the ESG investment Committees of sovereign wealth funds believe about Bitcoin,” he stated.
In response to these challenges, Batten has not only conducted research but also begun direct engagement with SWFs, aiming to educate and update their ESG committees about the latest developments in Bitcoin’s environmental impact. His goal is to realign the outdated perceptions with current realities, thereby removing the barriers to their investment in Bitcoin.
Supporting his theory, Batten pointed to recent investments by state pension plans in the US, such as those by Wisconsin and Michigan, which, despite being small in scale, had significant media impact and positively influenced market perceptions. “Wisconsin invested […] a total through Grayscale mainly. I believe their current position is around $160 million; that’s nothing compared to their total AUM […] however, even that very small allocation […] had a major impact on Bitcoin price that day,” Batten remarked.
Overall, Batten believes that SWF’s can not only contribute to a Bitcoinbull run, but they can also help stabilize and legitimize the market for broader, more conservative investment audiences. Moreover, he believes that it’s more likely that WSF’s will invest in Bitcoin than having another major nation state or big company like MicroStrategy.
He concluded, “Yes there is a blocker and there is effort required to go through it and it is hard but it’s nowhere near as hard in my view as convincing a nation state to adopt Bitcoin. So this is an area where whilst it’s hard, it’s not as hard as other areas and it’s also that there’s only one blocker there’s not a whole bunch of them and in most cases that is the ESG investment committee.”
At press time, BTC traded at $58,500.
Featured image created with DALL.E, chart from TradingView.com