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22.03.2024 07:11 PM
Bitcoin: "monster cycle" and targets at $80,000–$90,000 by end of year

Recent events in the financial markets have sparked a wave of discussions regarding whether there is a transfer of assets from gold-backed exchange-traded funds (ETFs) to Bitcoin ETFs.

Despite the rapid growth of Bitcoin ETFs in the USA, investment bank research indicates that the introduction of these cryptocurrency funds has not had a significant impact on the outflow from gold ETFs.

As of March 21st, the total value of Bitcoin ETFs reached $11.3 billion despite significant fund outflows from the Grayscale Bitcoin ETF.

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Gold ETFs vs. Bitcoin ETFs

The increased interest in digital gold has prompted discussions about a possible shift to Bitcoin, often referred to as digital gold. However, JPMorgan's analysis refutes this viewpoint, pointing out that the outflow from gold ETFs began as early as April 2022, before the launch of Bitcoin ETFs in the USA, indicating a trend unrelated to the growth of Bitcoin ETFs.

Data from the World Gold Council provides a broader picture. From September 2020 to December 2023, investors poured $229 billion into gold bullion, and central banks additionally acquired $155 billion. According to Nikolaos Panigirtzoglou from JPMorgan, this suggests a change in preferences rather than a decrease in the attractiveness of gold.

Regarding Bitcoin ETFs, interest in them as alternative investments is growing, especially among the younger generation. However, Bryan Armour from Morningstar and Nate Geraci from The ETF Store note that, at present, the market linkage between gold and Bitcoin ETFs remains minimal.

Armour expressed confidence that although there is a small group of investors transitioning from gold to Bitcoin, the outflow from gold is not related to the introduction of Bitcoin ETFs, as any interaction between them is limited, which is reflected in portfolios.

Even among Bitcoin ETFs, there was an outflow of funds this week. Farside Investors reported that over the past four days, there has been a total outflow of $836 million from Bitcoin ETFs, reflecting market volatility.

Bernstein and Standard Chartered Update their Bitcoin Forecasts

Standard Chartered, following an even more optimistic approach, expects Bitcoin to reach $150,000 by the end of the year and possibly $250,000 next year. These forecasts envision a future in which Bitcoin could replicate the investment trajectory of gold, drawing parallels with gold ETFs.

Analysts' forecasts at Bernstein promise an optimistic end to the year for the leading cryptocurrency. They have raised their forecast for Bitcoin by the end of the year from $80,000 to $90,000, citing several bullish factors.

According to the report, there is currently a new bull cycle for Bitcoin, supported by strong inflows into recently launched spot Bitcoin ETFs, active expansion of cryptocurrency mining capacities, and record profits for miners.

Analysts Gautam Chhugani and Mahka Sapra noted in their report:

"With a new bitcoin bull cycle, strong ETF inflows, aggressive miner capacity expansion, and all-time high miner dollar revenues, we continue to find bitcoin miners compelling buys for equity investors seeking exposure to the crypto cycle."

They also noted that Bitcoin miners remain attractive to investors seeking to enter the cryptocurrency cycle and have revised their assessments of stocks of companies engaged in cryptocurrency mining.

Analysts also predict a 15% decrease in hash rate due to shutdowns after the Bitcoin halving. However, based on current conditions, this value has been revised to a 7% decrease.

"We assume a 7% reduction in hashrate post halving from shutdowns versus 15% earlier."

The hash rate typically drops after halving because some miners become unprofitable due to reduced rewards.

Monster Cycle

Bernstein anticipates a "monster cryptocurrency market cycle" and predicts that the total market capitalization of cryptocurrencies will reach $7.5 trillion by 2025, nearly three times the current value of $2.53 trillion.

Bernstein's optimistic forecast also includes predictions for individual cryptocurrencies. For example, by 2025, Bitcoin's market capitalization will increase from the current $1.31 trillion to $3 trillion. Based on this forecast, the price of Bitcoin could double by next year and reach $150,000.

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