On 8 January 2024, Standard Chartered’s Global Research department released a research note titled “Bitcoin – Price upside from US spot ETF approval” that was written by Geoff Kendrick and Suki Cooper. The note provides a comprehensive analysis of the potential impact of the imminent approval of spot ETFs for Bitcoin by the U.S. Securities and Exchange Commission (SEC) and forecasts significant price growth for Bitcoin.
Standard Chartered is a multinational banking and financial services company headquartered in London, England. It operates a network of more than 1,200 branches and outlets across more than 70 countries and employs around 87,000 people. Despite its British base, it does not conduct retail banking in the UK, and around 90% of its profits come from Asia, Africa, and the Middle East.
Standard Chartered has a rich history that dates back to the mid-19th century. It was formed in 1969 through the merger of two banks: the Standard Bank of British South Africa and the Chartered Bank of India, Australia, and China. These banks had been established in 1863 and 1853, respectively, and had built their operations largely in the British colonies, thus laying the foundation for the bank’s focus on Asia and Africa.
The research note begins by highlighting the expected approval of spot ETFs for Bitcoin by the SEC, possibly later this week. This approval is seen as a pivotal moment for Bitcoin, potentially normalizing its participation among institutional investors and driving substantial inflows and price increases.
To estimate the potential impact of Bitcoin ETFs, the note draws a parallel with the introduction of the first U.S.-based gold ETP in November 2004. Following the gold ETP introduction, gold prices increased by approximately 4.3 times over seven to eight years. Standard Chartered expects Bitcoin to experience similar, if not greater, price gains due to the approval of spot ETFs. However, they anticipate these gains to materialize over a shorter period (one to two years), given the faster maturation expected in the Bitcoin ETF market.
The note projects Bitcoin to reach the $100,000 level by the end of 2024, aligning with previous analyses. Looking further ahead, they suggest that if ETF-related inflows occur as expected, Bitcoin could potentially reach around $200,000 by the end of 2025. This forecast is based on the assumption that between 437,000 and 1.32 million new bitcoins will be held in U.S. spot ETFs by the end of 2024, translating to an inflow of approximately $50-100 billion.
According to a report by CNBC published in October 2023, AllianceBernstein Holding L.P. (AB), also known as Bernstein, a global asset management firm, has released a bullish forecast for Bitcoin, predicting its price to reach $150,000 by 2025. This optimistic outlook is based on the expectation that the U.S. Securities and Exchange Commission (SEC) will approve a Bitcoin exchange-traded fund (ETF) in early 2024. The firm believes that an SEC-approved spot Bitcoin ETF would pave the way for traditional investors to gain direct exposure to Bitcoin through their portfolios, potentially driving up demand and pushing prices higher.
Gautam Chhugani, an analyst at Bernstein, highlighted the importance of timing in the SEC’s decision. He emphasized that even if one may not personally favor Bitcoin, viewing it objectively as a commodity suggests that the regulatory landscape is favorable for a spot Bitcoin ETF approval. Chhugani’s comments were part of a broader analysis where he also initiated coverage on several Bitcoin mining companies.
The note also mentioned the upcoming Bitcoin halving event scheduled for April 2024. During this event, the rewards for Bitcoin mining are halved, a feature programmed into Bitcoin’s underlying code. Chhugani believes that this halving will likely lead to the elimination of less successful miners, thereby consolidating the market share of those who remain.
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