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Why Bitcoin Could Climb to $1 Million Thanks to This Overlooked Factor

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Although Bitcoin (BTC) began to consolidate its gains from previous days, setting the tone for the majority of other assets in the market. cryptocurrency market, a stellar $1 million price tag is almost a certainty for his future with one particular factor at play.

In this case, the Bitcoin The market appears to be in the early stages of a phenomenon called “game theory,” which could play an important role in continuing widespread adoption and price gains for flagship decentralized finance (Challenge), according to RJ Fulton of The Motley Fool.

How will Bitcoin reach $1 million?

Specifically, the United States Securities and Exchange Commission (SECOND) approving spot Bitcoin exchange traded funds (AND F) paved the way for wider adoption of the first cryptocurrency active, allowing institutional investors to gain visibility while avoiding any direct involvement in the crypto industry.

Indeed, hedge funds, pension plans and other institutions that invest money on behalf of their clients and which previously could not or did not want to enter the cryptocurrency market due to its complexity can now include the BTC in their wallets and, in return, flood Bitcoin. market with considerable institutional capital.

According to data from The Motley Fool, approximately 700 professional investment firms, including Millennium Management, Morgan Stanley (NYSE: M.S.), and Bracebridge Capital, own approximately $5 billion in cash securities Bitcoin ETFdemonstrating the perceived importance of including Bitcoin in their portfolios.

If recent studies are to be believed, the ideal exposure is around 5%, and with institutional investors managing nearly $130 trillion in assets, Bitcoin’s market cap could exceed $7 trillion (compared to $1.35 trillion currently), while the price of the digital asset could exceed $400,000.

On the other hand, a recent study from ARK Invest suggested that a 5% allocation might be too conservative, arguing instead that the ideal exposure level should be close to 19%, in which case the Bitcoin market cap could climb up to $25 trillion and its price tag is huge $1.3 million.

Ideal Bitcoin portfolio allocation. Source: ARK Invest

Game Theory for Bitcoin

This is an example of game theory in its infancy: institutional investors (rational actors) making strategic decisions in their own interest, based on observing the actions of others. In this case, institutions see their peers profiting from their BTC investments, creating fear of missing out on returns.

In line with their natural competitiveness, these institutional players could use the enormous resources at their disposal to try to stay ahead of the competition, thereby creating a heightened sense of urgency and taking the game to a whole new level, sending the Bitcoin price towards new records. .

As a reminder, game theory is a concept that deals with interactions and competitive strategies in which the outcome of a participant’s choice of action depends critically on the actions of other “actors”, often applied in the contexts of business, finance, biology, politics. , and other areas.

Bitcoin Price Analysis

For now, Bitcoin is trading at a price of $68,260, down 0.5% over the past 24 hours, with a cumulative loss of 4.32% over the previous seven days but nonetheless gaining 7, 35% over the past month, according to the latest charts retrieved by Finbold on May 28.

30-day Bitcoin price chart. Source: Finbold

All things considered, the price of Bitcoin could be heading towards a mind-boggling $1 million in the future, but it’s important to understand that trends in this market can sometimes change wildly, so it’s essential to do your own research .

Disclaimer: The content of this site should not be considered investment advice. The investment is speculative. When you invest, your capital is at risk.

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