While Bitcoin bears argue that the theme posed by Bitcoin spot ETF trading is “over,” this argument fails to take into account two key factors, according to analysts at research and brokerage Bernstein.
Bernstein analysts Gautam Chhugani and Mahika Sapra said in a report to clients on Tuesday that those who are not optimistic about Bitcoin spot ETF trading mainly revolve around early allocations driven by retail investors, and the participation of institutional investors is limited. In a "cash and carry" trade, rather than a net long position, this means that the ETF's fund flow is not "real".
Bitcoin spot ETF topic to be continued
They believe that the recent 13F investment report shows that institutional investors’ participation in Bitcoin spot ETFs is only 22%, and that the increase in liquidity of CME Group’s Bitcoin futures contracts after the launch of ETFs is due to the above-mentioned “basis arbitrage transactions”. "evidence of.
However, these shorts are ignoring the prospect of a Bitcoin spot ETF getting approved for trading on the platforms of large brokers and large private banks in the third and fourth quarters of this year, two analysts said. That’s in line with Bloomberg ETF analyst Eric Balchunas and Bitwise CIO Matt Hougan.
Two Bernstein analysts believe that although on the surface, basis trading by institutional investors is a strategy, the inherent impact may be greater and is ultimately expected to promote the widespread application of Bitcoin. These investors are now evaluating "net long" positions as they welcome improved ETF liquidity.
"Basic trading" refers to institutional investors using the price difference between spot and futures prices for arbitrage, that is, buying Bitcoin spot ETFs and selling CME Group's Bitcoin futures contracts, with the goal of expiration of the futures contracts. arbitrage from the price difference.
The report states: “We believe that ‘basis trading’ is primarily driven by hedge funds, accounting for 36% of institutional investors’ allocations. However, we have spoken to investors participating in Bitcoin ETFs and the next step after basis trading is Evaluate the ‘long’ position.”
In addition, what is allocated to financial advisors is the real demand. The 13F report shows that most small and medium-sized financial advisors allocate 0.1% to 0.3% of their investment portfolios to Bitcoin ETFs. We believe growth will be driven by large institutional investors in approved ETFs and significant allocation headroom in existing portfolios.
"Bitcoin Strategy" support
Another factor is that more and more companies are using Bitcoin as a reserve asset. The reason is that the new accounting guidelines in the United States will make it easier for companies to hold digital assets on their balance sheets and allow companies to calculate accounting profits and losses based on market value. Don’t just hold Bitcoin on your balance sheet as a write-down. Analysts said:
We expect new increases in corporate treasury (for Bitcoin) demand in 2024, with MicroStrategy and Bitcoin mining players currently leading demand.
Recently, Block, a financial services technology company, announced that it will use net profits generated from Bitcoin-related businesses to buy Bitcoin every month over the next year.
While U.S. Bitcoin spot ETFs have seen net outflows of late, totaling $714.4 million, Bernstein analysts expect net inflows to start accelerating again. They stated:
We expect inflows into Bitcoin spot ETFs to accelerate again in Q3 and Q4, and the current volatile market is providing new entry points to prepare for the next wave of growth in institutional demand. From a technical perspective, this would be an interesting entry point if Bitcoin fell into the $50,000 to $60,000 range.
$60,000 is the “new bottom”?
Two analysts reiterated that Bitcoin will reach a target price of US$200,000 by the end of 2025, saying that Bitcoin’s current price of around US$60,000 is just like the price level when it was below US$10,000 in June 2020. The market is currently at In the post-halving downturn, the “first half” of the bull market is not even over yet.
Bernstein analysts also predict that Bitcoin will reach $500,000 by the end of 2029 and surge to $1 million by 2033.
〈Bernstein Analyst Predicts: Bitcoin Will Usher in a Big Boom, Seeing $200,000 by the End of Next Year〉 This article was first published in "Blocker".
