Bitcoin is looking like a hot commodity in the market again following the launch of the highly anticipated spot Bitcoin ETFs. With so much enthusiasm surrounding these products, the question arises as to how much more “the number” can increase.
The answer is of course unknown, but that hasn't stopped analysts from speculating, including that of $725 billion asset manager AllianceBernstein. They expect Bitcoin to potentially reach a new all-time high this year.
“We believe Bitcoin’s best days are ahead and the ETF-led Bitcoin market is primed for what we believe will be a FOMO rally,” analysts Gautam Chhugani and Mahika Sapra wrote in a note sent to the on Monday was distributed to customers.
AllianceBernstein analysts said the market quickly priced in the new ETFs after approval, but it had not yet taken into account the level of ETF inflows or the supply tightening that would accompany the impending supply squeeze Bitcoin halving.
Halving refers to an event enshrined in the Bitcoin code that occurs approximately every four years and aims to keep Bitcoin's inflation rate under control. While only 21 million BTC will be minted at any one time, the halving slows the rate at which new Bitcoin enters the market by halving the rewards for Bitcoin miners, who are responsible for securing the Bitcoin network.
Between higher demand and an expected drop in supply, analysts say investors may soon look to capitalize on Bitcoin's FOMO, or “fear of missing out on potentially lucrative gains.”
The analysts note that much of the inflows into the new ETFs have come from retail investors, particularly Bitcoin “believers” who they say have found ways to get them into their brokerage accounts. They note that retail interest in this group is still well below previous rallies in 2017 and 2021, but they expect even more funds could flow from this group.
While analysts acknowledge that a group of “non-believers” are still waiting for investments, another group of “curious investors” are expressing interest in learning more about Bitcoin. Taken together, they predict that these “new Bitcoin enthusiasts” will deploy capital “in the coming days.”
By any measure, spot ETFs have been a historic success. In the weeks since the Securities and Exchange Commission green light for ten spot ETFs to operate, three of them—BlackRock, Fidelity and most recently 21Shares from Ark Invest—have already accumulated more than $1 billion in assets BlackRock and Fidelity Each holds about $3 billion.
Bitcoin's price has risen steadily as interest in these ETFs increases, rising 8.5% year-to-date. Prices fell due to a steady outflow of funds from Grayscale following its conversion from a trust to a spot ETF, but these inflows have occurred slowed downand even Bitcoin exceeded the $50,000 mark Earlier this week, before things went south.
The Price of Bitcoin is currently just over $49,000.
The views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment or other advice.
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