Wall Street investment bank Bernstein recently released a report predicting that Bitcoin will rise to $70,000 by the end of this year, reaching a new all-time high. The report cites four major factors that could drive up the price of Bitcoin, including ETF net inflows, Federal Reserve interest rate cuts, a Republican victory in the US election leading to a change in leadership at the SEC, and the continued growth of the Bitcoin ecosystem.
According to DL News, after the approval of Bitcoin spot ETF listing, Bitcoin briefly surged to $49,000 and is currently hovering around $43,000. However, Bernstein analysts Gautam Chhugani and Mahika Sapra wrote in their report that they are optimistic about Bitcoin’s performance this year. They believe that Bitcoin will rise by 65% to around $70,000 by the end of the year and provided four reasons for their bullish outlook.
The first reason is the net inflows of Bitcoin spot ETFs. Last week alone, there were about 19,000 Bitcoin net inflows, and the dominance of ETFs will continue to profoundly affect the price trend. In a commodity with a known limited supply, such a scale of incremental demand will have a significant impact on the price.
In addition, ETF issuers are receiving “unprecedented and rapid” responses from investment advisors on how to allocate Bitcoin in client portfolios, indicating a potential long-term demand for Bitcoin unlocked by ETFs. The latest report from CoinShares shows that institutional cryptocurrency investment products had a net inflow of $708 million last week, totaling $1.6 billion since January 1, with Bitcoin accounting for 99% of this net inflow.
The macroeconomic environment is also favorable. Bernstein points out that the Federal Reserve has signaled possible interest rate cuts. With current rates ranging from 5.25% to 5.5%, savings returns will no longer be as attractive, and investors will seek returns in other assets. In a lower interest rate environment, risk assets like Bitcoin typically perform better.
During the Democratic Party’s tenure, the chairman of the US Securities and Exchange Commission (SEC), Gary Gensler, has been criticized by the cryptocurrency community and members of Congress for his enforcement actions in cryptocurrency regulation. However, in the upcoming US presidential election in November, if the Republican Party wins, the cryptocurrency market is expected to rally because it would mean a change in leadership at the SEC.
The fourth catalyst for Bitcoin’s historical high is the growth of the Bitcoin ecosystem. Bernstein predicts that as the Bitcoin developer ecosystem continues to evolve, Layer 2 will continue to drive transaction revenue for miners, and economic activities such as token minting and ordinals will continue to thrive.
Ed Goh, Head of Trading at cryptocurrency market maker B2C2, agrees with Bernstein’s viewpoint. He points out that Bitcoin has shown a clear preference for buyers, and the investment patterns in cryptocurrencies remain strong, with native cryptocurrency funds, retail brokers, and proprietary traders all seeing similar levels of investment, continuing the trend seen this year.