Introduction to Sovereign Wealth Funds and Bitcoin
Sovereign Wealth Funds (SWFs) are already gaining exposure to Bitcoin, but significant allocations won’t happen until the United States establishes clearer regulations for the digital assets industry. This is according to SkyBridge founder Anthony Scaramucci, who shared his insights on Anthony Pompliano’s podcast on May 8. Scaramucci, former White House director of communications during US President Donald Trump’s first term, believes that SWFs are buying Bitcoin on the margin, but a gigantic groundswell of buying won’t occur until the US government proposes clearer legislation.
The Role of Legislation in SWF Investment
Scaramucci emphasized that legislation will lead to “large blocks of buying” from SWFs. He expects the US government to propose crypto legislation in November, which will provide clearer guidance for traditional banks to custody Bitcoin and other digital assets. Once this happens, Scaramucci predicts that a significant wave of buying from SWFs will follow. This is because SWFs are government-owned investment funds that manage national savings, often built from surplus revenues like oil profits or trade gains.
The Size and Potential of SWFs
To put the potential of SWFs into perspective, Norway has the largest SWF in the world, with approximately $1.73 trillion in assets under management, followed by China with $1.33 trillion. Bitcoin’s market cap is approximately $2.05 trillion, according to CoinMarketCap. If SWFs were to allocate just a small fraction of their assets to Bitcoin, it could have a significant impact on the market.
The Impact of Clearer Regulations
Scaramucci believes that if stablecoin regulation is passed, clear guidance is provided for traditional banks to custody of Bitcoin and other digital assets, and there’s progress on tokenizing stocks and bonds, a significant wave of buying from SWFs is likely to follow. This could lead to a surge in demand for Bitcoin, potentially driving up its price. As Scaramucci said, “Then I will tell you that there will be large blocks of buying, or people worth 10, 20, 30 trillion dollars, buying a half a billion dollars of Bitcoin, buying a billion of Bitcoin.”
The Potential for Bitcoin’s Price
Scaramucci also mentioned that if a sovereign wealth fund were to invest in Bitcoin, it could lead to a million-dollar Bitcoin price. As he said, “But if you wanna see a million dollar Bitcoin, that’s when someone at a sovereign says ok, this is part of the infrastructure of the world’s financial services architecture.” This is a sentiment shared by ARK Invest CEO Cathie Wood, who recently said that the chances of Bitcoin reaching a seven-figure price by 2030 have increased.
Conclusion
In conclusion, while Sovereign Wealth Funds are already gaining exposure to Bitcoin, significant allocations won’t happen until the United States establishes clearer regulations for the digital assets industry. Once this happens, a significant wave of buying from SWFs is likely to follow, potentially driving up the price of Bitcoin. As the industry continues to evolve, it will be interesting to see how SWFs and other institutional investors play a role in shaping the future of Bitcoin and the broader digital assets market.
