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1 Best Cryptocurrency to Buy Before It Soars as Much as 6,560%, According to Some Wall Street Analysts
Bitcoin (BTC 1.80%) briefly hit an all-time high above $73,000 earlier this year, but its price has since slipped more than 20% to $57,000. That slide has been driven by concerns about selling pressure and economic uncertainty, particularly around interest rates.
Mt. Gox, a cryptocurrency exchange that went bankrupt in 2014 after losing up to 950,000 Bitcoin, recently began refunding customers. The market fears that lenders will immediately sell the coins once they have them. The German government has also reduced its Bitcoin position, adding to concerns about selling pressure.
Meanwhile, stubborn inflation has kept the Federal Reserve from cutting interest rates in 2024. Risky assets like Bitcoin tend to perform better in low-interest-rate environments, so the still-high rates have weighed on the cryptocurrency, especially as investors began the year expecting multiple cuts.
However, some Wall Street analysts still see significant upside potential for patient Bitcoin holders.
- Bernstein’s Gautam Chhugani believes that Bitcoin could hit $1 million by 2033 as spot Bitcoin exchange-traded funds (ETFs) bring more institutional investors into the market. This forecast implies more than 1,650% of its current price.
- Ark Invest’s Cathie Wood says Bitcoin could hit $3.8 million by 2030 if institutional investors “allocate just over 5% of their portfolios to Bitcoin.” That forecast implies an upside of more than 6,560% from the current price.
Is Bitcoin a Worthwhile Investment?
Spot Bitcoin ETFs Could Be a Significant Source of Demand
Like any asset, Bitcoin prices are governed by supply and demand. But Bitcoin’s supply is limited to 21 million coins, a feature defined by its source code, so demand is the most important variable. Gautam Chhugani and Cathie Wood See Bitcoin ETF Spots as a potential source of significant demand.
To understand why, consider the complexities associated with buying Bitcoin. Until recently, investors needed a dedicated account with a cryptocurrency exchange and typically had to pay exorbitant fees for each transaction. Spot Bitcoin ETFs eliminate these sources of friction. Investors can now add Bitcoin exposure to existing brokerage accounts, and many spot Bitcoin ETFs have relatively low fees. expense reports.
Ark Invest listed the benefits of spot Bitcoin ETFs in a recent newsletter.
“First, a spot ETF provides a direct way for institutional and retail investors to gain exposure to Bitcoin without having to deal with the complexities of self-custody and other onboarding requirements. Second, spot ETFs legitimize Bitcoin as an institutional asset, which should catalyze the acceptance and integration of Bitcoin into traditional financial systems. Finally, spot ETFs are expected to significantly increase the liquidity and trading volumes of Bitcoin.”
Chhugani and Wood believe institutional adoption of Bitcoin is key to the bull case. Professional money managers, such as investment banks and hedge funds, will have $145 trillion in assets under management by 2025, according to consulting firm PwC. If they were to contribute even a fraction of those assets to Bitcoin, its price could skyrocket. In fact, Wood thinks institutional investors will eventually allocate just over 5% of their portfolios to Bitcoin, pushing its price toward $3.8 trillion.
The first U.S. spot Bitcoin ETFs were approved in January, so the asset class is too new to draw firm conclusions, but the unprecedented rate of adoption is encouraging. iShares Bitcoin Trust (IBITS 0.46%) and the Wise Origin Bitcoin Trust (FBTC 0.48%) has accumulated more assets in its first 50 trading days than any other ETF in history, according to Bloomberg. Shortly thereafter, the iShares Bitcoin Trust reached $10 billion in assets at the fastest pace ever, according to the Wall Street Journal.
Perhaps most encouraging is that more than 600 financial institutions have declared that they own spot Bitcoin ETFs in Modules 13F filed with the Securities and Exchange Commission (SEC) for the first quarter. That number includes major investment banks such as JPMorgan Chase, Morgan StanleyAND Fargo Wellsand major hedge funds such as Millennium Management and Citadel Advisors.
Bitcoin is a risky asset due to its volatility and limited track record
Exploring price targets is exciting, but investors should never take implied gains for granted. No one knows what Bitcoin will be worth tomorrow, let alone several years from now.
Investors should keep in mind that Bitcoin is a risky asset. It has often dropped more than 20% in a period of days and dropped 75% during the most recent cryptocurrency market crash that began in November 2021. Similar declines are virtually guaranteed in the future.
Additionally, Bitcoin has a limited history, compared to stocks. S&P 500 Index It has been around for almost a century, and the Dow Jones Industrial Average has existed in one form or another for over a century. But Bitcoin was born in 2009, so it’s hard to guess how it will respond to various macroeconomic pressures.
Patient investors who are comfortable with these risks should consider buying a small position in Bitcoin today. I believe Bitcoin will be worth substantially more in the future, but there is a very good chance it will be worth substantially less between now and then.
JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool Company. Wells Fargo is an advertising partner of The Ascent, a Motley Fool Company. Trevor Jennewine has no position in any of the securities mentioned. The Motley Fool has positions in and recommends Bitcoin and JPMorgan Chase. The Motley Fool has a disclosure policy.