Bitcoin ETF approval could send Bitcoin to $150,000, says Bernstein

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(Kitco News) – Nashville-based international asset manager AllianceBernstein Holding L.P., better known as Bernstein, has become the latest firm to say that Bitcoin is due for a significant rally in the near future, predicting the top crypto could rise to $150,000 by 2025.

Bernstein analyst Gautam Chhugani attributed the high price projection to the firm’s expectations that the Securities and Exchange Commission (SEC) will approve a spot Bitcoin (BTC) exchange-traded fund (ETF) by the first quarter of 2024.

“You may not like Bitcoin as much as we do, but a dispassionate view of Bitcoin as a commodity, suggests a turn of the cycle,” Chhugani wrote. “A good idea is only as good as its timing – SEC approved ETFs by world’s top asset managers (BlackRock, Fidelity, et al), seems imminent.”

The optimistic price target for BTC represents a nearly five-fold increase from its current price of $34,350 and is more than double Bitcoin’s all-time high of $68,790, which was set on November 10, 2021.

Chhugani said the firm also anticipates that up to 10% of Bitcoin’s circulating supply will shift toward ETFs once a spot BTC ETF is approved, as these products would allow conventional investors to gain exposure to Bitcoin directly from their investment portfolios.

He noted that the only similar product currently available is Grayscale’s Bitcoin Trust (GBTC), which currently holds around 3% of the supply of Bitcoin. While GBTC is a listed product, it has struggled to attract investors due to trading at a negative premium for an extended period of time.

In December, GBTC hit a negative premium of 48.57% and struggled to gain any ground until BlackRock filed its spot BTC ETF application in June. GBTC currently trades at a negative premium of 13.12%, according to data provided by Coinglass.

Chhugani also pointed to the Bitcoin halving – which is predicted to occur sometime in mid to late April 2024 – as a development that is providing a boost to BTC price. He warned that “losing miners” will be “washed out” once the newly minted supply is cut in half, which will pave the way for big gains for the survivors.

Another reason for Bitcoin’s strong performance of late, and why it could see a substantial price increase moving forward, is its emergence as a safe haven asset in the eyes of global investors, according to Mohamed El-Erian, chief economic advisor at German financial services firm Allianz.

While speaking with CNBC on Tuesday, El-Erian said that U.S. Treasury bonds have fallen out of favor in the wake of the Israel-Hamas conflict, which has boosted Bitcoin’s stature as a reliable store of value.

“You have people talking about Bitcoins, about equity, being the ‘safe asset’ because they’ve lost confidence in government bonds being the safe asset because of the nature of the interest rate risk,” El-Erian said.

He noted that the yield on the U.S. 10-year Treasury is at least ten basis points higher than where it was on Oct. 7, a day before the Hamas attack on Israel, which means its price has declined despite the uptick in geopolitical uncertainty. He took this as a sign that investors are seeking safety in other assets.

“We haven’t seen the flight to quality of flight to safety that you would expect given what’s happening in the world,” El-Erian said.

For reference, Bitcoin was trading at $28,000 on Oct. 7, and currently trades at $34,450, representing an increase of 23%. Bloomberg Intelligence ETF analysts Eric Balchunas and James Seyffart say the odds of the SEC approving a spot BTC ETF by Jan. 10, 2024, is 90%.