Bernstein predicts a new stage of bitcoin’s bull market

What’s new? According to analysts at research and brokerage firm Bernstein, investors should prepare for the next phase of the bull market in bitcoin and related stocks.

Material by The Block

Experts believe the current bull market began in Q4 2023 with the rising prospects of approval of spot bitcoin ETFs in the United States, lifting the leading cryptocurrency from $25 000 to $46 000 by the time the funds launch on January 11, 2024.

Strong inflows into ETFs were the next catalyst, according to analysts, as their success was not factored into the price, and bitcoin rose to an all-time high near $74 000 before taking a multi-month pause. Finally, the victory of Donald Trump, a cryptocurrency supporter, in the November US presidential election led to the next big boost amid promises to make the US the “crypto capital of the world,” create a national bitcoin reserve, and establish a favorable regulatory framework for digital assets. As a result, bitcoin hit its latest all-time high of around $109 000 on Inauguration Day last month.

What else is known? Analysts led by Gautam Chhugani added:

“The next leg of the bitcoin bull market is loading up with a confluence of several positive catalysts. We believe the Crypto Task Force (led by David Sacks) is focused on delivering the National Bitcoin reserve, upon the direction of the President. The Trump administration also announced a sovereign wealth fund (SWF). We believe the SWF would consider key U.S. crypto companies/market leaders, as strategic assets to own.”

However, according to Chhugani, the Fed would need legislative approval in the form of a new bill funded by debt or by selling a portion of its gold reserves, leading to a rapid revaluation of the cryptocurrency. Bitcoins confiscated by the US government, worth about $20 billion, could also be added to the reserve.

Among other positive factors contributing to the next phase of bitcoin’s rise, analysts highlighted notable 13F filings with the Securities and Exchange Commission (SEC) last week in which Abu Dhabi’s sovereign wealth fund Mubadala disclosed a $437 million investment in spot bitcoin ETFs, while Goldman Sachs, Barclays, and Paul Tudor Jones’ investment firm increased the size of their positions.