Bitcoin’s recent surge appears to have hit a temporary snag, with the cryptocurrency’s price hovering around $50,900 after reaching a 26-month high of $53,000 earlier this month. However, some analysts remain bullish on its long-term prospects, with Fundstrat’s Tom Lee reiterating his ambitious prediction of a potential $150,000 price tag by year’s end.
Lee, speaking with CNBC, cited several factors driving his optimism, including the increasing demand fueled by the launch of new Bitcoin exchange-traded funds (ETFs), the cryptocurrency’s upcoming halving event and its effect on supply, and the expectation of looser monetary policy, which historically benefits risk assets like Bitcoin.
Bitcoin’s halving event is expected to occur in April and will see the coinbase reward miners receive for finding new blocks cut in half, meaning that the amount of BTC being issued daily will plunge.
Despite the recent pause, Lee downplays concerns about an imminent downturn, suggesting that the current consolidation is a natural part of the market cycle, saying “Bitcoin’s been holding up,” and adding he does not believe a drawdown is coming in the near future.
On CNBC, Tom Lee suggested that Bitcoin’s price could surge to as much as $150,000, which would nearly triple its current value even after the cryptocurrency surged by more than 160% over the past year over the introduction of spot Bitcoin ETFs.
Earlier this year, Lee shared an optimistic outlook on the price of Bitcoin as $150 trillion in US household wealth could boost the market after the launch of spot Bitcoin ETFs, which make it simple for US households to bet on the cryptocurrency.
Per Lee even a small allocation of US household wealth to Bitcoin could dramatically increase the value of the flagship cryptocurrency, estimating that there’s $150 trillion of household net worth in the US and that a 1% allocation would lead to $1.5 trillion of inflows, which already surpass Bitcoin’s current market capitalization.
As CryptoGlobe reported, if history repeats itself the spot Bitcoin ETFs could help the price of Bitcoin skyrocket and boost the total market capitalization of the cryptocurrency space in the process.
CCData’s Institutional Primer on the impact of a spot Bitcoin ETF compares it to the launch of the first gold ETF in the United States, which occurred back in November 2004 and, per the report, “provides insights into a potential Bitcoin ETF’s impact.”
The report details that gold’s price steadily rose from around $375 in May to $442 at the time of the ETF launch, reaching a high of $454 over substantial inflows. The precious metal’s price then retraced to $411 by early February 2005, the report adds, suggesting that we may observe a similar pattern for Bitcoin’s price as its price surged with the anticipation and saw a brief breakout, and could now see a healthy correction.
Nevertheless, by August 2011 the price of gold hit a record high as the SPDR Gold Shares (GLD) ETF became the world’s largest ETF, even surpassing the SPDR S&P 500 Trust ETF in value. As BTC competes with gold to become “the alternative asset class as the store of value,” the report concludes that “one can only wonder about the long-term growth potential for the Bitcoin asset class.”
Featured image via Unsplash.
