Government Bitcoin Holdings Surge 16% in Q1, Boosting Price Forecast to $500,000

Bitcoin is projected to reach a price of $500,000 within the next three-and-a-half years, according to Geoff Kendrick, global head of digital assets research at Standard Chartered. This forecast is based on the increasing indirect exposure of government entities to Bitcoin through their holdings in Strategy, a company that owns approximately 576,000 Bitcoin.

In the first quarter, 12 government entities, including the South Korea’s National Pension Service, the Swiss National Bank, and U.S. state retirement funds, increased their exposure to Strategy. These entities collectively hold 31,000 Bitcoin worth of Strategy shares. Other entities that increased their holdings include Swedish pension funds, a state-owned bank in France, and the Saudi Central Bank.

Kendrick noted that the increased holdings of Strategy by government entities reflect a growing structural demand for Bitcoin. This is particularly notable as some local regulations do not allow direct holdings of Bitcoin, making Strategy a viable proxy for gaining exposure to the cryptocurrency. The analyst also highlighted that institutional investment managers with over $100 million in assets under management are required to disclose their holdings through 13F filings with the Securities and Exchange Commission. These filings provide a clear indication of the maturing market and the attraction of new institutional buyers to Bitcoin.

Within the U.S., state retirement funds for California, New York, North Carolina, and Kentucky increased their Strategy holdings by the equivalent of 1,000 Bitcoin. Each share in Strategy equates to 0.0018 Bitcoin per diluted share, according to Strategy Tracker. However, the overall decline in direct holdings of Bitcoin through spot ETFs by sovereigns was noted as disappointing. For instance, the State of Wisconsin Investment Board sold all its Bitcoin holdings through ETFs, which were equivalent to 3,400 Bitcoin.

Despite this, Mubadala Investment Company, the sovereign wealth fund for Abu Dhabi's government, validated Standard Chartered’s thesis by increasing its Bitcoin exposure to 5,000 Bitcoin from 4,700 Bitcoin in the first quarter. This move underscores the growing acceptance and investment in Bitcoin by major government entities, further supporting the prediction that Bitcoin's price will continue to rise significantly in the coming years.