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According to a research note from Fundstrat released on Monday, the supply and demand dynamics of Bitcoin (BTC) indicate that the asset could potentially rise to $180,000 by April 2024.
This projection, which comes ahead of the upcoming meeting of the U.S. central bank, is primarily based on the anticipated approval of a Bitcoin spot ETF in the United States. The market research firm believes this development could disrupt BTC’s current price stability.
The Impact Of A Bitcoin ETF
Currently, Fundstrat estimates that Bitcoin sees approximately $25 million in daily demand, which aligns with the value of new coins introduced into circulation by miners each day.
“The launch of this [bitcoin ETF] would elevate daily demand to $125 million, while daily supply remains at $25 million,” stated Tom Lee, Fundstrat’s Head of Research. “The implied equilibrium price would need to increase to ensure that daily supply aligns with daily demand.”
“Equilibrium analysis indicates that a clearing price falls between $140,000 and $180,000, prior to the halving in April 2024,” Fundstrat added.
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The “halvening,” another term for the Bitcoin halving, refers to the event when the Bitcoin network reduces its BTC emissions per block by half. This event occurs every four years and has historically been followed by significant bull runs in the crypto market in the subsequent year.
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The upcoming halving will decrease Bitcoin’s emissions from 6.25 BTC to 3.125 BTC every ten minutes. While Coinbase researchers have suggested that this may not trigger another bull run, Fundstrat’s analysis indicates that the halving may not even be necessary to achieve a new all-time high.
This optimistic perspective is similarly held by analysts at Standard Chartered Bank, who forecast that Bitcoin could reach $120,000 before 2025, driven by miners retaining their newly minted coins in the medium term.
In the meantime, Bloomberg ETF analysts Athanasios Psarofagis and James Seyffart estimated this month that a Bitcoin spot ETF could accumulate $54 billion in capital over time, drawing from the success of Canada’s significantly smaller market.
The Fed’s Upcoming Meeting
Fundstrat’s forecast emerges just days before the next Federal Open Markets Committee Meeting (FOMC), where the Federal Reserve is widely anticipated to increase its target interest rate by an additional 25 basis points. Despite the Fed’s ongoing rate hikes, both stocks and Bitcoin have shown gains year to date, and the likelihood of an impending recession appears to be diminishing.
Lee from Fundstrat anticipates that the announcement tomorrow will influence stock prices by 1% and believes that institutions should not expect a significant market correction in the near future.
“We’re still in a situation where people are pessimistic and prepared to sell,” Lee remarked to CNBC’s Squawk Box. “No one is truly viewing this as the beginning of a new bull market.”
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