Investing.com – Analysts at research and brokerage firm Bernstein raised their price forecast to $200,000, up from the previous target of $150,000.
Bitcoin and cryptocurrency-related stocks remain undervalued and are ripe for institutional change as pessimism stemming from past regulatory hurdles fades, analysts wrote in a note Thursday.
“We remain confident in our thesis for a new Bitcoin cycle,” the analysts wrote, adding that Bitcoin is increasingly accepted by institutional investors and global asset managers. They believe this adoption is just the beginning and the next wave of demand is expected to come from cryptocurrency insiders.
The note emphasized that Bitcoin ETF projects are still far from complete. Since BlackRock (NYSE:) filed for its Bitcoin ETF on June 15, 2023, the price of bitcoin has increased by 150%. While early Bitcoin ETF allocations were driven by retail investors, with institutional participation at 22%, Bernstein sees mighty growth ahead. “We see Bitcoin ETFs on the verge of approval by major news agencies and major private bank platforms in the third/fourth quarter,” the analysts noted.
The report also addresses the skepticism of bears that ETF flows are not genuine, pointing out that institutional interest is initially based on a ‘cash and carry’ basis rather than ‘net long positions’. However, Bernstein sees this underlying trading as a “Trojan horse” for adoption, and these investors are gradually evaluating “net long positions” as they become more comfortable with improving ETF liquidity. They expect Bitcoin ETF inflows to accelerate in years three and four, viewing the current market as offering fresh levels of entry before the next wave of institutional demand arrives.
Bernstein’s analysis also shows that the Bitcoin portfolio allocation has enough room to grow. 13-F filings show that 22% of AUM is driven by institutional investors, with hedge funds making up about 36% of the institutional allocation. Analysts believe that the next step for these investors will be to price their “long” positions. They also emphasize that financial advisors, mainly tiny and medium-sized ones, with 0.1-0.3% of their portfolio allocated to Bitcoin ETFs are starting to drive real demand.
“We believe growth will be driven by larger advisors endorsing ETFs and significant allocation latitude within existing portfolios,” the note said.
Bernstein draws a comparison between Bitcoin’s current price levels and previous cycles, suggesting that Bitcoin at $60,000. dollars today is the equivalent of Bitcoin below 10 thousand. dollars in June 2020. “Bitcoin, despite its growth, is still in the early phase of the cycle and we see it as attractive here,” they noted.
“Asset managers have every incentive to push harder on marketing and distribution to scale their crypto businesses,” the note concluded.
