Bitcoin (BTC)’s supply and demand dynamics suggest that the asset could surge as high as $180,000 by April 2024, according to a research note from Fundstrat on Monday.
The forecast – which precedes the U.S. central bank’s next meeting – largely rests on a Bitcoin spot ETF being approved in the United States, which the markets research firm suspects will blow apart BTC’s current price equilibrium.
The Impact Of A Bitcoin ETF
At present, Fundstrat finds that Bitcoin experiences roughly $25 million in daily demand – about the same value of new coins brought into circulation by miners each day.
“This [bitcoin ETF launch] would bring daily demand to $125 million, while daily supply is only $25 million,” wrote Tom Lee, Fundstrat’s Head of Research. “The implied equilibrium price would need to rise so daily supply matches daily demand.”
“Equilibrium analysis suggests that a clearing price is $140,000 to $180,000, before the April 2024 halving,” Fundstrat continued.
The “halvening” (another way to refer to the Bitcoin halving) is when the Bitcoin network slashes its BTC emissions per block in half. The event occurs once every four years, and has consistently been followed by major crypto market bull runs in the following year.
The next halving will take Bitcoin’s emissions from 6.25 BTC to 3.125 BTC every ten minutes. Though researchers at Coinbase have suggested it may not cause another bull run, Fundstrat’s analysis suggests the halving won’t even be necessary for reaching a new all-time high.
This bullish outlook is largely shared by Standard Chartered Bank, whose analysts predicted that Bitcoin will touch $120,000 before 2025, thanks to miners hoarding their newly minted coins in the medium term.
Meanwhile, Bloomberg ETF analysts Athanasios Psarofagis and James Seyffart estimated this month that a Bitcoin spot ETF could accrue $54 billion in capital over time, based on the success of Canada’s much smaller market.
The Fed’s Upcoming Meeting
Fundstrat’s prediction comes days before the next Federal Open Markets Committee Meeting (FOMC) when the Federal Reserve is largely expected to raise its target interest rate by another 25 basis points. Despite the Fed’s persistent rate hikes, both stocks and Bitcoin are up year to date, and expectations of an incoming recession are on the decline.
It is surprising to me that every time the market wobbled this year, our institutional clients are ready to short
– there is no “buy the dip”
– likely happens when drop in inflationary pressures more evident
– because #Fed can eventually relent @fs_insight https://t.co/6wxrS6zalW— Thomas (Tom) Lee (not drummer) FSInsight.com (@fundstrat) July 25, 2023
Fundstrat’s Lee predicts that tomorrow’s announcement will move stock prices by 1%, and believes institutions shouldn’t expect a major market correction anytime soon.
“We’re still in a position where people are bearish and ready to sell,” said Lee to CNBC’s Squawk Box. “No one is really embracing this as an upward new bull market.”
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