Analysts from the research and brokerage firm, Bernstein, suggest that investors should prepare for the upcoming surge in the Bitcoin bull market and related equities. They argue that the current bull market, which began in the last quarter of 2023, is poised for its next big leap, powered by several positive catalysts.
The analysts trace the beginning of this bull market to the rising possibility of spot Bitcoin exchange-traded fund (ETF) approvals in the U.S. This development pushed Bitcoin from $25,000 to $46,000 by the time the funds launched on January 11, 2024.
As per Bernstein’s view, the successful inflow into these ETFs, which had not been priced in, drove Bitcoin to a record high of approximately $74,000, after which it took a several-month hiatus. The subsequent boost came from pro-crypto Donald Trump’s victory in the U.S. presidential election in November. Trump’s promise to transform the U.S into the “crypto capital of the world” and establish a favorable digital asset regulatory framework saw Bitcoin hit a new all-time high of approximately $109,000 on his Inauguration Day.
In a note to clients on Monday, Gautam Chhugani, leading the analyst team, wrote, “The next leg of the Bitcoin bull market is bracing itself, backed by several positive catalysts. We believe that the Crypto Task Force, under the guidance of David Sacks, is committed to establishing the National Bitcoin reserve as directed by the President.”
The analysts believe that such a Bitcoin reserve could be funded by the Federal Reserve or Treasury, although this would necessitate legislative approval and would potentially trigger swift repricing of the cryptocurrency. Furthermore, the Bitcoin seized by the U.S. government, currently valued at around $20 billion, could be added to the reserve, possibly initiating a global competition among sovereign states.
The Bernstein team also highlighted additional catalysts for the next Bitcoin bull market phase. These include notable filings with the Securities and Exchange Commission and recent major investments in Bitcoin ETFs. They noted Strategy’s (formerly MicroStrategy) latest $742 million Bitcoin purchase, substantial year-to-date spot Bitcoin ETF inflows, and the SEC’s repeal of SAB 121, enabling crypto custody by banks.
The analysts concluded, “The combined adoption by banks, institutional investors, corporations, and potentially sovereigns positions Bitcoin as a significant rival to gold. With Bitcoin valued at $2 trillion market value versus $18 trillion for proven gold reserves, we see an asymmetric upside for Bitcoin.”
