Published: January 10th, 2024
With traditional finance chomping at the bit to see which Bitcoin spot ETF applications will get SEC approval first, Bloomberg and Standard Chartered Bank (SCB) have both issued predictions that Bitcoin's price will hit USD 200,000 by the end of next year.
‘If ETF-driven inflows turn out to be as high as anticipated, we believe a price level for BTC of USD 200,000 is possible,’ said Standard Chartered Bank in a note to investors.
A spot Bitcoin ETF would track BTC's current price and follow its price swings, giving investors access to potential gains without having to own the digital asset and have direct exposure to volatility. Any new Bitcoin ETF would also be overseen by experts at an investment firm which keeps the cryptocurrency in a managed portfolio.
BlackRock, Fidelity, Grayscale, iShares, Bitwise, Ark, Invesco, and Franklin have all made spot ETF applications to the SEC and are understood to be in the final stages of the approval process.
Standard Chartered said its ‘200k by 2025’ prediction tracks to the bank's earlier forecast of USD 100,000 by the end of this year.
‘ETF approval will be the determining factor of upside for BTC's price,’ the analyst note said. ‘In our view this will be a paradigm shift that brings Bitcoin investing into the financial mainstream. We're looking for ETF approval to trigger significant inflow and price upside for Bitcoin.’
SCB's statement comes on the back of a prediction by Bloomberg analyst Erik Balkunas, who said on Monday that ‘a couple of billion’ in ETF positions will be sold in year one. 'It could be even more than that,’ he wrote. ‘I wouldn't be surprised to see USD 10 billion by December.’
Bitcoin started climbing out of its late 2021/early 2022 stupor in March of 2022. In the first 30 days of the year, the price of BTC price sank from USD 47,732.70 to USD 35,069.30 and struggled to regain lost ground. In Spring 2022, however, the catalysts for an upward surge had begun to build.
In late March, US Treasury Secretary Janet Yellen told the Wall Street Journal that she had 'still felt some skepticism’ about cryptocurrencies, but also said she believed innovations to the payment system could be potentially healthy. Given her long track record of anti-crypto commentary, markets reacted to her more measured tone as a sign that something has changed.
BTC also passed an important milestone when the effects of compounding on its price meant the asset had moved out of the red for the year-to-date.
Analysts believed BTC's steady gains in Q1 2022 might be a sign that the spike of FUD (fear, uncertainty and doubt) brought on by Russia's invasion of Ukraine and the COVID pandemic were starting to fade.
Signs of a new confidence was evident in the DeFi market, where comments by Terraform Labs CEO Do Kwon indicated BTC bullishness was back on. Kwan told Bloomberg that he intended to buy billions more Bitcoin to fund Terra's official wallet and provide further backing for the TerraUSD (UST) stablecoin.
Despite the upward price action, analysts at blockchain data firm Covalent said it was too early to celebrate an end to BTC's price rollercoaster. The turbulence wouldn't end, they said, until BTC's price held onto its gains for at least a fortnight.
‘Most of Bitcoin's recent gains have been influenced by overall macro market sentiment, particulalry around equities. Other factors making an impact are whales and large derivative positions driven by high-volume trading.’
While Bitcoin's potential as a safe haven asset has gained steady, if slow, acceptance, it has more or less tracked to traditional markets since stocks crashed during the pandemic. ‘Correlation between BTC and the S&P 500 index actually reached an 18-month high last week’, Covalent added.
The price of Bitcoin and Ethereum spiked in late March 2022 when it punched through resistance as the entire crypto market headed higher. Figures from CoinMarketCap showed Bitcoin's price rose by more than five per cent on 27th March to USD 47,018, while Ethereum also shot up five per cent to USD 3,290.
Cumulatively, Bitcoin rose by a full 14 per cent in the seven days prior, while Ethereum was up 15 per cent.
Other top coins experienced a similar lift. Polkadot (DOT) was up seven per cent and Solana (SOL) was up five per cent. XRP rose by three per cent and Cardano (ADA) shot up by three per cent.
The cause of the rebound wasn't immediately clear. Looking at the events surrounding that period, in hindsight it looks like external factors were starting to make their presence felt in price action.
As mentioned above, BTC's correlation with the S&P 500 reached an 18-month high, and Terra Labs announced plans to buy billions of dollars' worth of Bitcoin and keep it in a reserve. Figures from Glassnode also showed that Bitcoin balances on the major exchanges reached their lowest point in more than three years. That strongly suggests increased demand for the asset, while supply may be restricted by moves to take BTC holdings off exchanges and place them in cold wallets.
The news cycle also had an impact. El Salvador took another step towards mass adoption of BTC in the country by issuing Bitcoin-backed ‘volcano bonds.’ Though delayed they are still in the works, despite pleas from the International Monetary Fund (IMF) to abandon the idea. Salvadoran President Nayib Bukele tweeted to his 3.5 million followers that the bonds would make the developing world ‘a bit harder for global institutions to police.’
It's also worth noting that Ukraine legalized cryptocurrency in order to facilitate donations to its defense fund, generating over USD 100 million in much needed inflows to the nation's war-torn treasury.