Wall Street investment bank Bernstein recently released a report predicting that Bitcoin will rise to $70,000 by the end of this year, setting a new historical high. The report cites four factors that could drive the price of Bitcoin, including the net inflow of ETFs, the Federal Reserve’s 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 chain ecosystem.
In a recent survey, 84% of respondents believed that Bitcoin would quickly surpass $69,000 after the halving, and 70% of investors plan to increase their holdings.
Ark Invest’s Cathie Wood has stated that Bitcoin is “replacing gold” and that the banking crisis will prove Bitcoin’s hedging qualities.
In terms of ETF inflows, Bitcoin briefly surged to $49,000 when spot Bitcoin ETFs were approved for listing. Although it has since declined and is currently hovering around $43,000, the Bernstein report expresses optimism about Bitcoin’s performance this year.
Bernstein analysts Gautam Chhugani and Mahika Sapra wrote in the report that the price range of $42,000 to $43,000 would be a good buying opportunity for Bitcoin. They predict that Bitcoin will rise another 65% to around $70,000 by the end of this year and provide four reasons for their bullish view.
The first reason is the net inflow of Bitcoin spot ETFs. Last week alone, there was a net inflow of around 19,000 Bitcoins, and the dominant power of ETFs will continue to profoundly affect the price trend. In a commodity with a known limited supply, such a significant increase in purchasing 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 ETFs.
The latest report from CoinShares shows that institutional cryptocurrency investment products received a net inflow of $708 million last week, totaling $1.6 billion since January 1, with Bitcoin accounting for 99% of these net inflows.
In terms of the macroeconomic environment, Bernstein points out that the Federal Reserve has signaled possible interest rate cuts. With current interest rates at 5.25% to 5.5%, savings returns will be less attractive, and investors will turn to other assets for returns. In a low-interest-rate environment, risk assets like Bitcoin typically perform better.
During the Democratic Party’s rule, Gary Gensler, Chairman of the US Securities and Exchange Commission (SEC), has faced criticism from the cryptocurrency community and lawmakers for his enforcement actions in cryptocurrency regulation. However, if the Republican Party wins in the upcoming US presidential election in November, the cryptocurrency market is expected to rise as this would mean a change in leadership at the SEC.
The fourth catalyst for Bitcoin reaching a new all-time high is the growth of the Bitcoin chain ecosystem. Bernstein expects that as the Bitcoin developer ecosystem continues to evolve, Layer 2 will continue to drive transaction income for miners, and token minting and Ordinals will continue to be sustained economic activities.
Ed Goh, Head of Trading at cryptocurrency market maker B2C2, strongly agrees with Bernstein’s views. He points out that Bitcoin shows a clear preference for buyers and that the investment pattern in cryptocurrencies remains strong, with native cryptocurrency funds, retail brokers, and proprietary trading firms all equally investing, continuing the trend seen this year.