Bernstein analysts predict Bitcoin ETFs are “on the verge of approval” at major brokerage firms and major private bank platforms. Analysts say institutional trading is a “Trojan horse” for adoption. In this context, they maintain their Bitcoin price target of $200,000 by the end of 2025.
Bernstein: Bitcoin bears are missing it!
BTC bears argue that spot Bitcoin ETF trading is “over.” But they’re missing two important factors, according to analysts at research and brokerage firm Bernstein. Gautam Chhugani and Mahika Sapra wrote that arguments against Bitcoin ETF trading revolve around early allocations being driven by individual investors, with institutional participation limited to underlying “cash and carry” trading rather than net long positions, meaning ETF flows are not “real.”
Bernstein analysts note that recent 13F filings reveal institutional share of spot Bitcoin ETF participation is just 22%. They also highlight that increased liquidity in CME Bitcoin futures contracts post ETF launch is evidence of underlying trading. However, Chhugani and Sapra echoed recent views from Bloomberg ETF analyst Eric Balchunas and Bitwise CIO Matt Hougan, saying what the bears missed is that spot Bitcoin ETFs will be available on major brokerage firms and major private bank platforms in the 3rd or 4th quarter of this year. He says it is “on the verge of approval.”
A “Trojan horse” for Bitcoin adoption
Bernstein analysts say institutional basis trading is a “Trojan horse” for adoption. They also claim that these investors are now considering “net long” positions because they are relieved by improved ETF liquidity. Basis trading here refers to a strategy in which institutional investors buy spot Bitcoin ETFs by arbitraging the difference between spot and futures prices and sell CME Bitcoin futures contracts, aiming to profit from the price difference when the futures contract matures. In this regard, analysts make the following assessment:
We believe the underlying trade” is mostly driven by hedge funds ~ 36% of institutional allocation. However, based on our conversations with investors involved in Bitcoin ETFs, we can say that the next step after base trading is to consider ‘long’ positions. Additionally, allocations to financial advisors are real demand, with 13F disclosures revealing mostly small-to-midcap advisors with 0.1-0.3% of their portfolio allocated to Bitcoin ETFs. We believe growth will be driven by larger advisors endorsing ETFs and significant allocation headroom in existing portfolios.
Another supportive factor for BTC
Another factor, analysts say, is greater adoption of Bitcoin as a treasury reserve asset, as new FASB guidelines make it easier for companies to keep the asset on their balance sheets by accounting for market gains and not just impairment losses. Analysts describe the issue as follows:
We expect a new surge in demand from corporate treasuries in 2024, with MicroStrategy and Bitcoin miners leading the demand today. Recently, Block announced that it will purchase monthly BTC from Bitcoin-related gross profits for the next 12 months.
Bitcoin ETFs ‘not over’
cryptokoin.comAs you follow from , US spot BTC ETFs have now seen a four-day net outflow totaling $714.4 million. Another $154.4 million came out of the funds on Tuesday. Despite this, Bernstein analysts expect net inflows to start accelerating again. In this regard, they draw attention to the following point:
3rd/4th Bitcoin ETF inflows We expect it to accelerate again in the quarter, and current volatile markets are providing new entry levels before the next leg of institutional demand begins. Tactically, low to mid $60k/high $50k (if we get there) should be interesting entry points.
“$60,000 is now the new $10,000 for BTC!”
Last week, Chhugani and Sapra raised their price targets for BTC from $150,000 to $200,000 by the end of 2025, with expectations of unprecedented demand from spot Bitcoin ETFs and BTC miner marginal cost of production modeling. Analysts ultimately aim for Bitcoin to reach $500,000 by the end of 2029 and $1 million in 2033.
Reiterating these targets to clients today, Bernstein analysts say Bitcoin in the current $60,000 range is equivalent to prices below $10,000 in June 2020, in the same range after the halving. Analysts add that although Bitcoin made a significant 53% rally from around $42,000 at the beginning of the year, it may still be at the beginning of the cycle. Analysts offer some basis for their predictions:
The change this time is the visibility of institutional demand driven by ETFs and the institutional marketing push from leading asset managers, for example Blackrock with $20 billion AUM for Bitcoin ETFs saw the opportunity and likely a potential $80-100 billion crypto business over the cycle can provide visibility. We think asset managers have every incentive to push harder on marketing and distribution to scale their crypto businesses.
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