Standard Chartered sees more sovereign wealth funds buying bitcoin

After Abu Dhabi's recent investment in BlackRock's bitcoin ETF, Standard Chartered's global head of digital assets research, Geoffrey Kendrick, expects more sovereign wealth funds to enter the market.

"The 13F filings for Q4 show that process is underway," Kendrick said in an email to The Block on Tuesday. "It is happening."

Form 13F is a quarterly report filed with the U.S. Securities and Exchange Commission by institutional investment managers overseeing at least $100 million in assets. Kendrick analyzed Q4 data from 13F filings and said in a new report published Tuesday that the data is "very encouraging" for his recent forecast that bitcoin could reach $500,000 by 2028.

"While hedge funds once again dominated the buying in Q4, bank buying (which started in Q3) was also very strong," Kendrick said in the report. "Even more importantly, Abu Dhabi's sovereign wealth fund reported a 4.7k BTC equivalent position in Blackrock's IBIT ETF. While this is small for now, we would expect the size to increase over time and, indeed, for other sovereigns to also start buying."

More institutional investors to buy bitcoin

As the bitcoin market matures, Kendrick expects it to attract a wider range of buyers. The trend has already shifted from predominantly retail investors before ETFs to hedge funds in the early ETF phase, and now sovereigns are starting to participate, according to Kendrick.

"This gives us comfort to say that even if buying by Strategy... [formerly Microstrategy] slows down dramatically (it has bought a staggering 227k BTC since the US election, more than 1% of the ever-to-exist supply), we think other buyers are waiting to step in," Kendrick said.

Looking ahead, Kendrick expects "more super long-term long-only money" — such as state pension funds like the State of Wisconsin Investment Board and the State of Michigan Department of the Treasury — to invest in bitcoin. He also predicts central banks could follow, pointing to the Czech National Bank considering a bitcoin allocation of up to 5% of its €140 billion reserves (around €7 billion) and the Swiss National Bank in the early stages of bitcoin investment consideration.

As institutional access to bitcoin improves and volatility declines, Kendrick expects more portfolios to "migrate towards their optimal level from an underweight Bitcoin starting point."