Bitcoin Price Could Surge to $180,000 Before 2024 Halving, Fueled by Potential ETF Launch, Says Fundstrat

Bitcoin Price Could Surge to $180,000 Before 2024 Halving, Fueled by Potential ETF Launch, Says Fundstrat

According to a recent note from Fundstrat, a leading investment research firm, the price of Bitcoin is poised for a staggering 521% surge to reach $180,000 before the scheduled halving in April 2024. The firm speculates that the introduction of a Bitcoin exchange-traded fund (ETF) could play a significant role in reshaping the daily demand dynamics for the cryptocurrency.

Bitcoin ETF’s Impact on Demand

Fundstrat highlights that Bitcoin’s current daily demand stands at approximately $25 million, which aligns with the daily mining rewards of the same amount. However, this equilibrium may undergo a significant transformation with the potential launch of a Bitcoin ETF. The research suggests that a Bitcoin ETF could introduce an additional $100 million of daily demand for Bitcoin.

When combined with the forthcoming halving in April 2024, which will cut daily mining rewards to $12 million, this situation implies that the price of Bitcoin would need to experience a substantial surge to find a balance between buyers and sellers.

Implied Equilibrium Price

Fundstrat’s analysis indicates that following a Bitcoin ETF launch, the daily demand for the cryptocurrency could escalate to $125 million, while the daily supply would remain at $25 million. To reach an equilibrium between supply and demand, the implied clearing price is estimated to range from $140,000 to $180,000, prior to the April 2024 halving.

Halving’s Bullish Effect

The halving, or halvening, of Bitcoin is generally considered a bullish event as it involves reducing the reward given to miners by half. This measure is taken to control the supply of Bitcoins and has historically been associated with price surges.

Multiplier Effect on Market Cap

Sean Farrell, Fundstrat’s head of digital asset strategy, points out that the Bitcoin network exhibits a multiplier effect in the range of 4.0x to 5.0x. This implies that every $1 increase in demand could result in a remarkable $4 to $5 increase in the cryptocurrency’s market capitalization.

Probability of Bitcoin ETF Approval

Based on their analysis, Fundstrat assigns a 75% probability for the approval of a spot Bitcoin ETF in the near future, with companies like BlackRock and Fidelity eagerly awaiting responses from the SEC regarding their application filings. The firm anticipates that such an ETF launch would attract new investors and create a surge in demand for Bitcoin.

Potential ETF Impact

Should a Bitcoin ETF be approved, Fundstrat foresees the possibility of one of the largest ETF launches on record. It suggests that the ETF could even surpass the Invesco QQQ ETF, which attracted $36 billion in inflows during its first year following its launch in March 1999.

Bitcoin ETF Market Growth

Fundstrat believes that Bitcoin ETFs could eventually surpass the precious metals ETF market, which currently holds assets worth nearly $230 billion. The firm envisions the Bitcoin ETF category growing to over $300 billion, driven by the surge in demand.

With the potential launch of a Bitcoin ETF and the halving event looming in 2024, Fundstrat predicts a substantial price surge for Bitcoin, potentially reaching $180,000. These speculations are in line with the optimism shared by other firms, such as Standard Chartered, which also expects the cryptocurrency to surpass $120,000 in the near future.