Imminently expected spot ETF approval, halving event could fuel rally: AllianceBernstein
Bitcoin could reach an all-time high in 2024, with the potential to end the year at around $80,000, according to analysts at AllianceBernstein.
The crypto BTCUSD, 0.59%’s price will likely be driven higher this year by the potential approval of an exchange-traded fund investing directly in bitcoin, the so-called halving event expected in April, and growing demand from companies, according to Gautam Chhugani and Mahika Sapra, analysts at AllianceBernstein. “We expect 2024 to be a breakout inflection year for crypto,” the analysts wrote.
Bitcoin rallied over 150% in 2023 and kicked off 2024 with a rally, rising to as high as $45,913 on Tuesday, its highest since April 2022, according to CoinDesk data. The crypto is still over 30% below its all-time high of around $68,990 set in 2021.
Crypto industry participants expect the U.S. Securities and Exchange Commission to approve a spot bitcoin ETF by Jan. 10, the final deadline facing the agency to make a decision on the application filed by ARK Investments and 21Shares. The agency is likely to approve similar products filed by other asset managers, such as BlackRock BLK, -1.42%, at around the same time, industry participants said.
If the spot bitcoin ETFs are approved, the event is likely followed by a “fairly brief and shallow selloff” of bitcoin, as some traders sell their coins to lock the gains, the AllianceBernstein analysts wrote in a Tuesday note.
However, the ETFs could gradually bring in increasing institutional inflows and push up bitcoin prices, the analysts noted.
“Bitcoin ETF flows build up could be gradual, but the applicants will be fighting hard to get a lead into this massive asset accumulation game, tuning up advertising and Bitcoin branding leading to a snowball effect,” the analysts noted.
They expect bitcoin ETFs to see around $5 billion inflows in the first half of 2024, with inflows of around $10 billion in the second half. By 2028, about 10% of bitcoin could be custodied under ETFs, the analysts said.
Meanwhile, the bitcoin halving, during which rewards given to miners will be cut in half, could also provide a tailwind, according to the analysts. Bitcoin’s price has historically seen significant appreciation months after halvings.
The analysts also expect exchange-traded funds investing in ether ETHUSD, 0.58% to be approved by June this year. Ether could be the only crypto other than bitcoin to get an exchange trade fund investing directly in it, the analysts noted.