In the latest episode podcast “The Bitcoin Layer” Daniel Batten, a renowned Bitcoin advocate, discussed the potential impact of sovereign wealth funds (SWFs) on the price of Bitcoin, predicting a rise to over $148,000 per BTC if the funds decide to invest even a petite fraction of their assets. With $35.7 trillion under management by SWFs and public pension funds, an allocation of 1% could have a significant impact on Bitcoin’s valuation.
Batten’s analysis draws on the enormous scale of assets managed by SWFs and public pension funds, noting that even a fractional investment compared to their total assets can have a profound effect on the market. He explained: “If there were a 1% deployment into Bitcoin, we can calculate from the current ratio of dollar invested to market capitalization growth that it would drive the price of Bitcoin to over $148,000.”
Why Sovereign Wealth Funds Are Likely to Buy Bitcoin
According to Batten, the main obstacle is not a lack of interest, but the lack of an acceptable investment framework within these funds, particularly in relation to ESG (environmental, social and governance) criteria. “All the sovereign wealth funds want to invest in Bitcoin. It’s not for lack of desire,” Batten quoted Kevin O’Leary as saying, emphasizing that these funds are currently restricted by their ESG investment committees. These committees have yet to buy into Bitcoin’s environmental credentials, which Batten says are currently much more positive than the general perception, marred by old-fashioned information.
Batten suggested that ESG criteria, which are a significant factor in investment decisions for SWFs, are based on data that is at least three years senior and no longer accurately reflects the current state of bitcoin mining technology and its environmental impact. “There is a huge knowledge asymmetry where the knowledge that we currently have about bitcoin and its environmental benefits is now so different from what the ESG investment committees of sovereign wealth funds think about bitcoin,” he said.
In response to these challenges, Batten has not only conducted research but has also begun direct engagement with SWFs, with the goal of educating and updating their ESG committees on the latest developments in Bitcoin’s environmental impact. His goal is to re-align old-fashioned perceptions with current realities, thereby removing barriers to their Bitcoin investment.
In support of his theory, Batten pointed to recent investments by state pension plans in the U.S., such as those in Wisconsin and Michigan, which, although diminutive, had a significant media impact and positively influenced market perceptions. “Wisconsin invested […] in total mostly by Grayscale. I believe their current position is around $160 million; that’s nothing compared to their total AUM […] but even this very small allocation […] “It had a huge impact on the price of bitcoin that day,” Batten noted.
Overall, Batten believes that SWFs can not only assist Bitcoin’s bull run, but also assist stabilize and legitimize the market for a broader, more conservative investment audience. He also believes that SWFs are more likely to invest in Bitcoin than another immense nation state or immense company like MicroStrategy.
He concluded: “Yes, there is a blocker and it takes effort to overcome it, and it is difficult, but in my opinion it is not as difficult as convincing a nation state to adopt Bitcoin. So this is an area where, while it is difficult, it is not as difficult as in other areas, and also there is only one blocker, there are not a whole bunch of them, and in most cases it is an ESG investment committee.”
At the time of going to press, the BTC price was $58,500.
Featured image created with DALL.E, chart from TradingView.com
