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 cited four factors that could drive up the price of Bitcoin: net inflows into ETFs, interest rate cuts by the Federal Reserve, a Republican victory in the US election leading to a change in the SEC leadership, and the continued growth of the Bitcoin ecosystem.
In a survey, 84% of respondents believed that Bitcoin would quickly surpass $69,000 after the halving, and 70% of investors planned to increase their holdings.
Ark Invest CEO Cathie Wood has stated that Bitcoin is “replacing gold” and that the banking crisis will prove Bitcoin’s hedging properties.
In the wake of the approval of the Bitcoin spot ETF, Bitcoin briefly soared to $49,000 before falling back to around $43,000. However, according to DL News, Bernstein is optimistic about Bitcoin’s performance this year and expects it to reach a new all-time high.
Bernstein analysts Gautam Chhugani and Mahika Sapra wrote in the report that the $42,000 to $43,000 range 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 outlook.
The first reason is the net inflows into Bitcoin spot ETFs. Last week alone, there were approximately 19,000 Bitcoins flowing into ETFs. The dominance of ETFs will continue to have a profound impact on the price trend. In a commodity with limited supply, such a significant increase in purchasing demand will have a major impact on the price.
In addition, ETF issuers are receiving “unprecedented and rapid” responses from investment advisors on how to allocate Bitcoin in their clients’ portfolios. This indicates that ETFs may indeed unlock long-term demand for Bitcoin.
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 inflows.
In terms of macroeconomic conditions, Bernstein points out that the Federal Reserve has signaled a possible interest rate cut. With current 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 tenure, Gary Gensler, Chairman of the US Securities and Exchange Commission (SEC), has faced criticism from the cryptocurrency community and lawmakers for his enforcement actions on cryptocurrency regulation. However, if the Republican Party wins in the presidential election in November, the cryptocurrency market is expected to rally as this would mean a change in the SEC leadership.
The fourth catalyst for Bitcoin’s historic high is the growth of the Bitcoin ecosystem. Bernstein predicts that as the Bitcoin developer ecosystem continues to develop, Layer2 will continue to drive miners’ transaction revenue, and economic activities such as token minting and ordinals will continue.
Ed Goh, Head of Trading at cryptocurrency market maker B2C2, strongly agrees with Bernstein’s views. He points out that Bitcoin has shown a clear preference for buyers, and the investment patterns in the cryptocurrency market remain strong. Investment volumes from native cryptocurrency funds, retail brokers, and proprietary trading firms are evenly split, continuing the trend seen this year.