Wall Street Analysts Recommend Investing in This Cryptocurrency for Potential 1,000% Surge: Top Pick to Buy Now

Bitcoin's Future Catalysts: Spot ETF Approval and Mining Reward Reduction

KEY POINTS

The recent green light for spot Bitcoin ETFs has the potential to attract a surge in retail and institutional investors, amplifying the demand for Bitcoin.

Anticipated reduction in Bitcoin mining rewards later this year might alleviate selling pressure.

According to one analyst, there’s a predicted 1,000% upside by the year 2029.

In the coming years, two driving forces have the potential to propel Bitcoin to new heights.

For over two years, the cryptocurrency industry has weathered turbulence, triggered initially by a shift away from risk assets amid recession concerns in late 2021. The downfall gained momentum with the collapse of the Terra blockchain ecosystem, setting off a chain of bankruptcies and forced liquidations that further plunged the market into distress.

The cumulative value loss surpassed $2 trillion when the market eventually hit rock bottom. However, Bitcoin (BTC -1.06%) emerged as the catalyst that revived the cryptocurrency market in recent months, fueled by two noteworthy factors capturing investors’ attention: the imminent approval of spot Bitcoin exchange-traded funds (ETFs) and the upcoming reduction in Bitcoin mining rewards.

The first factor has materialized, with the U.S. Securities and Exchange Commission greenlighting 11 spot Bitcoin ETF applications, including proposals from major asset managers like BlackRock and Fidelity. This development is poised to spark heightened interest among both retail and institutional investors, potentially driving up the demand and subsequently boosting the price of Bitcoin.

Indeed, some analysts on Wall Street are optimistic, forecasting a tripling or quadrupling of Bitcoin’s value by 2025, while another analyst envisions a tenfold increase in value over the next five years.

credit: fool

The green light for spot Bitcoin ETFs has the potential to amplify demand in the cryptocurrency market.

While the SEC had started approving Bitcoin futures ETFs in October 2021, these products invest in futures contracts rather than the actual cryptocurrency, resulting in a deviation from its exact price movement. For instance, the ProShares Bitcoin Strategy ETF yielded a 39% return in the past six months, whereas Bitcoin’s value increased by 54% during the same period.

Spot Bitcoin ETFs, in contrast, will directly invest in Bitcoin, closely mirroring its price dynamics. The allure of such products lies in providing investors with a straightforward exposure to Bitcoin, eliminating the complexities associated with cryptocurrency exchanges and blockchain wallets. Investors can easily acquire shares of a spot Bitcoin ETF through conventional brokerage accounts, potentially driving increased demand from both retail and institutional traders.

Adding granularity to this, Bitcoin’s price is primarily influenced by supply and demand dynamics, with demand being the key variable due to its fixed total supply of 21 million coins, of which approximately 19.6 million have been generated. Therefore, if the accessibility offered by spot Bitcoin ETFs results in heightened demand from retail and institutional investors, the price of Bitcoin could experience significant surges in the coming months and years.

Several Wall Street analysts view this as a probable scenario, especially when coupled with the anticipated reduction in mining rewards. Notably, reputable financial institutions such as BlackRock and Fidelity participating as ETF issuers lend credibility to these predictions. Analysts like Gautam Chhugani from Bernstein foresee Bitcoin reaching $150,000 by 2025, implying a 210% upside. Geoff Kendrick of Standard Chartered Bank suggests a potential $200,000 target by 2025, signaling a 313% upside. Meanwhile, Tom Lee from Fundstrat is optimistic about a $500,000 target achievable by 2029, implying a remarkable 1,000% upside.

The forthcoming decrease in Bitcoin mining rewards has the potential to alleviate downward selling pressure.

Every four years, Bitcoin mining rewards are halved when 210,000 blocks are added to the blockchain, with the next halving event set for April 2024. Analysts anticipate a significant decrease in selling pressure following this event, as miners will experience a 50% reduction in Bitcoin inflows, effectively cutting their cryptocurrency supply in half.

To put this into perspective, Michael Saylor, the former CEO of MicroStrategy, estimates that selling pressure will drop from $12 billion annually to $6 billion annually after the April 2024 halving. This reduction in selling pressure is equivalent to an increase in demand, potentially driving up the price of Bitcoin.

Saylor, who predicted in 2022 that Bitcoin could reach $500,000 in the next decade (implying a 1,000% upside), has more recently suggested that Bitcoin might eventually hit $5 million. While this might seem like an astronomical figure, historical data shows a precedent for halving events leading to a surge in Bitcoin prices.

The chart below illustrates the dates of previous halving events and outlines the returns observed in the subsequent two-year periods.

DATA SOURCE: FOOL

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