Will Bitcoin hit a new all-time high this year?

By Mary Liu, BitpushNews

Analysts at Bernstein Investment Company predict that Bitcoin will not face significant obstacles in returning to its historical high of $69,000 this year, and may even surpass $70,000.

Analysts Gautam Chhugani and Mahika Sapra wrote in a report to investors, "While we are not expecting volatility to surge directly to historical highs, we are optimistic about the risk-return for the remaining time in 2024, based on today's prices."

On January 11, after the listing of 10 spot Bitcoin ETFs in the United States, Bitcoin briefly plummeted to $49,000 and is currently trading at around $42,600.

The report added that the $42,000 to $43,000 range is a "strong support" and predicted that Bitcoin will rise by another 65% to around $70,000 before the end of the year.

Analysts Chhugani and Sapra provided four reasons for their bullish outlook.

"Massive Inflows into ETFs"

First is the net inflow into ETFs, with Bernstein stating that approximately 19,000 Bitcoins were inflowed just last week.

The analysts stated, "ETF giants will continue to be a significant factor influencing price movements. For BTC with a known limited supply curve, any incremental demand of this magnitude will impact prices."

Bernstein indicated that the second reason for their bullish view on Bitcoin is that ETF issuers are receiving an "unprecedented and accelerating" response from advisory clients inquiring about how to allocate Bitcoin in client investment portfolios, indicating that ETFs may indeed release long-term demand for Bitcoin.

A report released today by CoinShares showed a net inflow of $708 million into institutional crypto investment products just last week, bringing the total net inflow since January 1 to $1.6 billion, with Bitcoin accounting for 99% of these flows.

The total inflow into the U.S. BTC spot ETF market was $1.7 billion, lower than the weekly average of $1.9 billion since its launch on January 11. Nevertheless, the market is still growing.

CoinShares stated, "Funds flowing into the U.S. BTC ETF have been offset by outflows from existing issuers, totaling $6 billion, but the data highlights a significant slowdown in the momentum of these outflows."

Last week, Grayscale Bitcoin Trust (GBTC) sold $926.7 million worth of BTC, while ProShares sold $108.9 million worth of BTC, but these outflows were offset by inflows from iShares (BlackRock) and Fidelity ETF, which added $1.6 billion.

Interest Rate Cuts

Bernstein stated that the macroeconomic conditions also appear favorable.

The Federal Reserve has hinted at a possible interest rate cut, with the cut ranging between 5% and 5.25%. With lower interest rates, savings returns will no longer be attractive, and investors will seek returns elsewhere, with risk assets, including Bitcoin, often performing better under lower rates.

However, Federal Reserve Chairman Jerome Powell ruled out the possibility of an early interest rate cut in March 2024 during an interview with CBS 60 Minutes on Sunday, suggesting that a potential rate cut cycle may be delayed until May 2024 or later.

Impact of U.S. Election on the SEC

Setting aside monetary policy, Bernstein suggested that the crypto market may rise due to a Republican victory in the U.S. presidential election—because this would mean a change in leadership at the U.S. Securities and Exchange Commission (SEC). SEC Chairman Gary Gensler has faced criticism from the crypto industry and lawmakers for his enforcement approach to crypto regulation.

Bitpush previously reported that the crypto industry has raised over $85 million for the 2024 U.S. election. Major donors include Coinbase, venture capital firm Andreessen Horowitz, and Ripple, each donating at least $20 million.

The Fairshake Super PAC and its affiliates have raised $6 million since the beginning of this year, in addition to the previously confirmed $78 million. Major beneficiaries include Chairman of the House Financial Services Committee Patrick McHenry and Majority Whip Tom Emmer, ensuring that the crypto industry continues to expand its influence on Capitol Hill.

Growth of the Bitcoin Ecosystem

Bernstein stated that the fourth driver for Bitcoin is the growth of its on-chain ecosystem. For example, the Ordinals protocol, which provides a unique identifier for a small portion of Bitcoin, transforming it into products similar to NFTs.

The report stated, "With the development of the Bitcoin developer ecosystem, we expect Layer 2 to continue to drive miners' transaction revenue, and token minting and Ordinals' economic activity to continue."

Ed Goh, trading head at cryptocurrency trading firm B2C2, also agreed with Bernstein's view. Goh stated, "Bitcoin has shown a clear preference for buyers, and the investment pattern in cryptocurrencies remains strong, with investments from local crypto funds, retail brokers, and proprietary trading firms evenly distributed, continuing the trend we have seen so far this year."

According to Bitpush terminal data, Bitcoin fell from an earlier price of $43,400 to $42,200 today. At the time of writing, the 24-hour decline was 1.2%. SwissBlock analysts stated in a report on Monday that despite the decline, BTC is still holding above $42,000, which is an important support level for buyer intervention, but due to the lack of new investment narratives in the crypto market, risk appetite is currently low.

The report noted, "Exclusive drivers such as Bitcoin ETFs in the cryptocurrency market have already played a role, leaving participants waiting for the next important signal."

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