At the start of 2024, a price target of $100,000 for Bitcoin looked like a sure bet. Wall Street had embraced Bitcoin as an asset class, and the launch of spot Bitcoin ETFs promised to bring a flood of new investor money. However, the reality hasn’t matched the hype. Bitcoin is actually down nearly 10% since the launch of the ETFs. But there’s still hope for Bitcoin to soar.
The Bitcoin ETF investment thesis has already evolved. Ark Invest released a report suggesting a much higher optimal Bitcoin allocation of 19.4% in investor portfolios, up from the previous guideline of 6.2%. This radical change leads to a price target of $2.3 million for Bitcoin. Imagine a world where every investor, including institutional investors and sovereign wealth funds, allocates a fifth of their assets to Bitcoin.
The much-anticipated Bitcoin halving in April could also unlock significant value for the cryptocurrency. Previous halvings have led to spectacular rallies, with the 2020 halving pushing Bitcoin to its all-time high. While past performance is no guarantee of future performance, the halving thesis makes sense. It boosts scarcity and makes Bitcoin more deflationary, making it more attractive to long-term investors.
However, as Bitcoin becomes more mainstream, it may start to behave differently. Institutional investors adopting a buy-and-hold strategy could reduce volatility, which is desirable for stability but could dampen the explosive price swings needed to reach $100,000 or higher.
While recalibrating expectations, there is still a long-term bullish sentiment for Bitcoin. It may become less volatile and more correlated with traditional asset classes as it goes mainstream. This could mean less aggressive price swings but doesn’t diminish the potential for Bitcoin to break through the $100,000 mark by the end of the year.
Overall, the Bitcoin ETF investment thesis and the upcoming halving offer significant catalysts for Bitcoin’s future. Whether it reaches its full potential depends on how investors allocate their portfolios and how Bitcoin adjusts to its growing mainstream presence. It’s a thrilling time for Bitcoin, and the next few months will undoubtedly shape its trajectory.
