Bitcoin to Hit $200K Soon, Says Bernstein

Analysts at Bernstein have revised their Bitcoin (BTC) price forecast upward to $200,000 from the previous target of $150,000.

These Wall Street experts assert that Bitcoin and crypto-related stocks are still undervalued and are on the cusp of significant institutional investment, as past regulatory concerns are fading.

The analysts highlight their confidence in the “Bitcoin new cycle thesis.” They note an increase in adoption by institutional investors and global asset managers. This trend, according to them, is just the beginning, with the next wave of demand expected from those currently not involved in crypto.

Their report emphasizes that Bitcoin ETFs are still in their early stages. Since BlackRock submitted its Bitcoin ETF application on June 15, 2023, Bitcoin’s price has surged by 150%.

Initially, retail investors were the primary drivers of Bitcoin ETF allocations, with institutional investors making up just 22%.

Bernstein anticipates significant growth in the near future, predicting that Bitcoin ETFs will gain approval from major wirehouses and large private bank platforms by Q3/Q4. Despite some skepticism that ETF flows are not genuine, Bernstein views the initial institutional interest, driven by the strategy of “cash & carry trade,” as a precursor to broader adoption.

As these investors become more comfortable with improved ETF liquidity, they are likely to consider “net long” positions. The analysts foresee accelerated Bitcoin ETF inflows in the third and fourth quarters, providing new entry points before the next wave of institutional demand.

Bernstein’s analysis shows that Bitcoin’s portfolio allocations have great potential for growth. According to 13-F filings, institutional investors manage 22% of assets under management (AUM), with hedge funds accounting for about 36% of this. 

The next logical step for these investors, according to Bernstein, is to consider “long” positions, which means holding onto Bitcoin for a longer period to benefit from its potential increase in value.

Financial advisors, especially those managing small to mid-sized portfolios with 0.1-0.3% allocated to Bitcoin ETFs, are beginning to drive real demand. The note suggests that larger advisors who approve ETFs and the considerable allocation space within existing portfolios will be key drivers of future growth.

The analysts compare current crypto price levels to previous market cycles. They suggest that Bitcoin at $60,000 today is similar to Bitcoin being under $10,000 in June 2020. Despite the recent rally, they view BTC as still in an early cycle and attractive at current levels. They conclude that asset managers have strong reasons to improve their marketing and distribution efforts to expand their crypto business.

In summary, Bernstein’s revised forecast and analysis present a compelling case for Bitcoin’s growth potential. They highlight the increasing interest from institutional investors, the early stages of Bitcoin ETFs, and the significant growth potential in portfolio allocations. As regulatory concerns fade and institutional adoption rises, Bitcoin seems poised for substantial future growth.