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(Kitco News) – Bitcoin (BTC) is expected to undergo its quadrennial halving sometime in April 2024, and investment research firm Fundstrat thinks the price of the top cryptocurrency could increase more than 500% to hit $180,000 in the lead-up to the event.
Due to the design of the Bitcoin algorithm, roughly every four years, the Bitcoin network undergoes a ‘halving,’ which reduces the number of BTC minted with each new block. This has historically led to an increase in price as the new supply decreases while the cost to operate mining equipment remains the same or increases, depending on changes to the network’s hashrate and difficulty gauge.
Fundstrat sent a note to clients on Monday saying that while Bitcoin’s daily demand of roughly $25 million is equivalent to current daily mining rewards of about $25 million, that could all change in the event that a spot Bitcoin ETF launches.
“This [bitcoin ETF launch] would bring daily demand to $125 million, while daily supply is only $25 million,” Fundstrat said. “The implied equilibrium price would need to rise so daily supply matches daily demand. Equilibrium analysis suggests that a clearing price is $140,000 to $180,000, before the April 2024 halvening.”
Based on the current price of BTC, the daily mining reward will drop to $12.5 million after the halving, which means the price would have to rise substantially to reach an equilibrium between buyers and sellers.
Sean Farrell, head of digital asset strategy at Fundstrat, said in a note sent to clients earlier in July that a multiplier effect in the range of 4.0x to 5.0x is reasonable to assume for the Bitcoin network. “This means that $1 of demand can result in a $4 to $5 increase in market cap,” he said.
Farrell added that he sees a 75% probability that a spot BTC ETF is approved in the near term after some of the largest asset managers in the world, including BlackRock and Fidelity, submitted applications.
“We anticipate [a bitcoin ETF] would attract new investors and generate increased demand for Bitcoin,” Farrell said, adding that approval for BlackRock could lead to one of the biggest ETF launches on record.
The Invesco QQQ ETF is the current record holder after the product attracted $36 billion worth of inflows in the first year after its launch in March 1999.
“Bitcoin ETF eventually could become >$300 billion category,” Fundstrat said, a figure that would surpass the precious metals ETF market, which currently holds around $230 billion in assets.
Fundstrat is not alone in its bullish outlook for Bitcoin as Mark Yusko, founder and CEO of Morgan Creek Capital Management, said that BTC could reach $300,000 by 2028 during an interview with CoinDesk TV’s First Mover show on Thursday.
The prediction came as Yusko was comparing Bitcoin with gold, saying gold is not portable or divisible, whereas Bitcoin is. “Bitcoin fixes both of these issues and is equally scarce,” Yusko said as he made the case that BTC could eventually catch up to the precious metal’s valuation.
“The monetary value of gold is about $6 trillion,” he said. “I think Bitcoin can replace all of that. The monetary equivalent of $6 trillion is about a 10X from here, which gives us a price of about $300K.”
He estimated that the $300,000 price point would be reached by Bitcoin’s next halving in 2028 and cited the historical performance of its price after previous halving events. “Every [Bitcoin] halving we’ve added a zero, and by next April I think we could go to $100,000,” he said.
Funstrat and Yusko have joined a growing list of analysts who see a significant rise in Bitcoin price in the years ahead.
Earlier in July, Standard Chartered predicted that the top crypto could reach $50,000 in 2023 and top out at $120,000 by the end of 2024. That prediction followed an update in April where the bank said the “crypto winter” was over and predicted BTC would hit $100,000 by the end of 2024.
Crypto services provider Matrixport also said it sees Bitcoin rallying as high as $125,000 by the end of 2024.
“On June 22, 2023, Bitcoin made a new one-year high, marking the first time in a year,” Matrixport said in a report on July 5. “This signal has been triggered four times and in all four cases, the bull market fully unfolded within 12-18 months. If history is any guide, then, there is now a 100% probability that by the end of 2024, Bitcoin will experience another massive bull market with a price target of $125,000 (+310%) – based on the previous three signals.”
Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.
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