1 Top Cryptocurrency to Buy Before It Soars 1,415% to $1 Million, According to Certain Wall Street Analysts

Bitcoin (CRYPTO: BTC) has returned 150% in the past year, easily outpacing the US stock market. But Bernstein analysts Gautam Chhugani and Mahika Sapra expect the cryptocurrency to soar much higher in the next decade. Price targets are listed below with implied upside based on Bitcoin’s current price of $66,000.

2025: $200,000 (202% implied increase)

2029: $500,000 (658% increase implied)

2033: $1 million (1.415% implied increase)

Chhugani and Sapra explained two reasons for their confidence in a recent note to clients. First, Bitcoin demand among institutional investors is on an upward trend due to the recent approval of spot Bitcoin ETFs. Second, Bitcoin supply is limited to 21 million coins due to periodic halving events.

Here’s what investors need to know about Bitcoin.

Spot Bitcoin ETFs have already increased demand among institutional investors

The SEC approved 11 spot Bitcoin ETF applications in January 2024. This was a major development for two reasons. First, Bitcoin now carries the regulatory seal of approval that legitimizes the cryptocurrency as an institutional asset. Second, spot Bitcoin ETFs provide direct access to Bitcoin without the complexity of cryptocurrency exchanges and are generally less costly.

For example, iShares Bitcoin Trust (NASDAQ: IBIT) has an expense ratio of 0.25%; This means that the annual fee for a $10,000 portfolio would total $25. However, Coinbase Global charges up to 0.6% per transaction, meaning a $10,000 transaction could cost $60.

Collectively, this value proposition is resonating with the market. In fact, BlackRock’s iShares Bitcoin Trust and Fidelity’s Wise Origin Bitcoin Trust (NYSEMKT: FBTC) accumulated more assets in their first 50 days on the market than any ETF in history, according to Bloomberg Intelligence. The iShares Bitcoin Trust reached $10 billion in assets faster than any other ETF, according to The Wall Street Journal.

Also notable is that more than 400 institutional investors purchased positions in the iShares Bitcoin Trust and more than 200 positions in the Wise Origin Bitcoin Trust in the first quarter, according to a Form 13F filed with the SEC. These figures include Citadel Advisors, DE Shaw and Millennium Management, the three most profitable hedge funds in history.

In a note to clients, Bernstein analysts Gautam Chhugani and Mahika Sapra explained why spot Bitcoin ETFs could lead to greater institutional adoption in the future. “We believe US-regulated ETFs are a turning point for crypto, bringing structural demand from traditional pools of capital.”

The story continues

Bitcoin halving events were followed by continuous appreciation of prices

Bitcoin is similar to other assets in that its price is determined by supply and demand. But unlike most assets, the supply of Bitcoin is fixed so demand is the most important variable. Periodic halving events are the mechanism by which the 21 million token supply limit is implemented.

To elaborate, Bitcoin mining subsidies (newly minted Bitcoin given to miners who successfully verify a block of transactions) decrease by 50% every 210,000 blocks are added to the blockchain. Halving events occur approximately every four years and are important because they reduce selling pressure as miners have less Bitcoin left to sell.

As shown in the chart below, halving events have consistently occurred before significant price appreciation.

Bitcoin Halving

Halved Price

Price at Next Halving

Come back

28 November 2012

$12

647 dollars

5.291%

July 9, 2016

647 dollars

$8,821

1.263%

May 11, 2020

$8,821

$63,462

619%

Data source: Morgan Stanley, YCharts.

The last halving event took place on April 19, 2024, when Bitcoin traded at $63,462. As shown above, history tells us that Bitcoin will be more valuable at the next halving event in 2028. The chart also shows that with each subsequent halving event the return has fallen, with the rise this time being less than 619%.

This trend is due to the decreasing impact of halving events on total supply. For example, in 2012 the block subsidy was reduced from 50 BTC to 25 BTC, meaning that the absolute reduction in newly minted Bitcoin was 25 BTC per block. This halving event affected the supply more deeply than the next halving event in 2016, when the block subsidy dropped from 25 BTC to 12.5 BTC.

With this in mind, the most recent halving event, which reduced the block subsidy from 6.25 BTC to 3,125 BTC, should be the least impactful event to date. But spot Bitcoin ETFs are an unknown variable that could significantly change Bitcoin’s price trajectory over the next four years. In other words, while past performance is never a guarantee of future returns, Bitcoin could return more than 619% by 2028.

Bitcoin is a worthwhile investment but only for those who can tolerate volatility

Gautam Chhugani and Mahika Sapra are not the only Wall Street analysts who think Bitcoin will go to $1 million. Cathie Wood recently said that if institutional investors devoted just over 5 percent of their assets to identifying Bitcoin ETFs, its price could reach $3.8 million.

However, while it’s fun to consider price targets, investors should remember that no one knows what Bitcoin will be worth tomorrow, let alone a decade from now. There are reasons to be bullish, of course, but there are also reasons to be cautious. Bitcoin fell 75% between November 2021 and November 2022, and a similar decline is possible (or even probable) in the future.

Investors who find this idea intolerable should stay away from Bitcoin. But investors who are comfortable with this level of volatility should consider buying a position in Bitcoin (or spot Bitcoin ETF) today.

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Trevor Jennewine has no position in any stocks mentioned. The Motley Fool has positions in and recommends Bitcoin and Coinbase Global. The Motley Fool has a disclosure policy.

1.415% of the Top 1 Cryptocurrencies to Buy Before It Soars to $1 Million, According to Some Wall Street Analysts Originally published by The Motley Fool