By Hannah Perez
Bernstein analysts expect the cycles to repeat themselves. They reiterated their prediction of USD $150,000 for Bitcoin and advised buying shares of the main miners, anticipating a post-halving price increase.
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Bernstein Analysts Remain Bullish on Bitcoin and Post-Halving Price Trajectory
Although they recognize that this cycle is different, they expect higher prices due to high demand for ETFs
They reiterated their prediction of USD $150,000 and advised investing in shares of mining companies
Bitcoin(BTC) secured a new all-time price peak above $73,500 in March amid the halving countdown and high demand for new US-listed Bitcoin exchange-traded funds (ETFs).
However, since then, the leading cryptocurrency by market capitalization has corrected about 15% and has not revisited the all-time price high. Amid a widespread downtrend, Bitcoin revisited the $61,000 level on Saturday amid attacks in the Middle East and is hovering around $62,000 at press time.
Meanwhile, there are just three days left until the halving, the event of reducing the Bitcoin network's mining reward by half that has historically brought price increases. Analysts at research and brokerage firm Bernstein expect the cycles to repeat themselves and anticipate a recovery in the price of Bitcoin after this event.
In a note to clients on Wednesday, which was picked up by The Block, analysts Gautam Chhugani and Mahika Sapra expressed optimism about the cycle ahead and reiterated their bullish prediction for Bitcoin.
We expect Bitcoin's bullish trajectory to resume after the halving, when hash miner rates have adjusted and ETF inflows resume.
ETF Demand Will Boost Bitcoin Price
The authors referenced the slowdown in inflows into Bitcoin ETFs seen over the past few weeks. In March, the product group recorded daily positive flows of more than USD $1 billion, however, this figure has been reducing since then, with numerous sessions turning negative.
Bernstein's team was also optimistic about these vehicles, arguing that the integration of ETFs by a broader group of financial institutions “will continue to provide structural demand for Bitcoin.”
Rumors have been circulating about the alleged interest of big banks like Morgan Stanley in offering the new ETFs to their clients, and figures like Bloomberg ETF analyst Eric Balchunas have shared similar opinions online with Bernstein. Several Wall Street titans have taken an active role as APs on BlackRock's Bitcoin ETF.
“We continue to expect Bitcoin to reach a cycle high of $150,000 by 2025,” Bernstein added reiterating a previous price prediction, the coverage cited.
Analysts raised their projection to a target of $90,000 by 2024 a few weeks ago, in response to investor euphoria around ETFs and the potential impact of this in sync with reduced post-halving supply.
This cycle has been different, but it will still be bullish
In the report, they highlighted previous Bitcoin cycles in which the cryptocurrency rose in price following the event before warning that the halving itself does not lead to price appreciation without new demand. They also pointed out the difference between this cycle and previous ones. (The upcoming halving on April 20 will be the fourth in Bitcoin history.)
Historically, a Bitcoin price breakout has always followed the halving event and sometimes a few months after the halving. However, in the current 2024 cycle, ETF approvals in January led to strong price appreciation before halving.
Other analysts have also pointed to the discrepancy of this cycle with respect to previous ones to question Bitcoin's bullish thesis after the halving. While some are still optimistic about a run in the months following the tapering event, others believe the spikes could be smaller than expected due to early price surge.
Bernstein advises buying mining shares
Bernstein analysts continued the report by analyzing the potential impacts of the event on miners and the hash rate of the Bitcoin blockchain. (Hashrate or hash rate refers to the total combined computing power used to mine and process transactions on a proof-of-work blockchain.)
They noted that shares of mining companies have underperformed Bitcoin so far this year, which appears to be a sign of the concerns that the halving has generated among investors about the profitability of mining operations.
Despite this, Bernstein considers it favorable and has recommended investing in Bitcoin mining companies, anticipating that the main public miners could outperform Bitcoin in the next 12 months. Specifically, he expects the industry to consolidate around four leading miners: CleanSpark, Marathon, Riot Platforms, and Cipher Mining.
Bearish scenario is less likely
The authors also expect that around 7% of the network's hash rate will be shut down after the halving as less efficient mining operations become unprofitable and small miners shut down.
Although they warned that the drop in the hash rate could be even more acute if Bitcoin suffers a correction to the $40,000 level or lower, a scenario that they do not consider to be that likely.
“We believe the chances of this adverse scenario occurring are lower, given that structural demand for ETFs is far from over, in our view ($12 billion in actual inflows to date vs. $80 billion in estimated entry for 2024-25)”, they added.
Article by Hannah Estefanía Pérez / DiarioBitcoin
Image from Unsplash
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