The projection highlights the firm’s bullish outlook on Bitcoin and the wider cryptocurrency market’s future, even as a few are currently pulling back from their recent highs.
Bitcoin price is down more than 6% Tuesday, trading above the $63,000 mark after hitting new highs of more than $73,000 last week. The slide took hold over the weekend.
However, the selling was not limited to Bitcoin as other cryptocurrencies have experienced a decline while US equity futures are down. Ethereum has fallen more than 7%.
The more than 6% fall in BTC has put it on track for its largest one-day fall in two weeks.
Even so, the premier cryptocurrency is up around 50% so far in 2024 and more than 125% in the last 12 months. With Bitcoin surging to new highs last week, profit-taking has occurred, while talk regarding the US Federal Reserve potentially not cutting rates this year has also impacted the price.
Despite the more recent fall, analysts at Bernstein believe the current phase of Bitcoin consolidation is temporary and offers a dip buying opportunity prior to Bitcoin halving.
“We continue to see a cross-cycle 18-month opportunity with Bitcoin and the entire crypto ecosystem,” declared Bernstein.”Overall, Bitcoin is seeing correction ahead of the halving (down ~10% last 7 days). ETF flows are reflexive – higher on the way up and slower with weaker price action.”
“Yesterday, Bitcoin ETFs clocked a net outflow of $154mn, the first outflow day since March 1,” they added. “Historically, Bitcoin price action has consolidated ahead of the halving, and considering Bitcoin rallied hard prior to ETFs and post the ETFs launch with record inflows, the correction seems healthy and does not affect our cross-cycle view, i.e that Bitcoin is headed to $150K as the cycle high by 2025.”
Bernstein sees the market consolidating prior to halving (April 20, 20224) and then expects the overall bull markets to continue.
Looking further ahead, they see the 2025 crypto market cap opportunity at $7.5 trillion, with Bitcoin’s market cap leading the charge, rising to $3 trillion.
The firm explained it expects the growth of Bitcoin with ETFs continuing to drive adoption within asset portfolios across RIAs, private banks, and wirehouses, while it also sees the Bitcoin ETF industry assets under management (AUM) growing from $60 billion today to $300 billion by the end of the cycle in 2025.
“We expect Bitcoin halving and weak circulating float on exchanges to keep Bitcoin supply constrained relative to the strong demand by ETFs,” added Bernstein.
Meanwhile, it sees the Ethereum ecosystem hitting a $1.8 trillion market cap. The Ethereum ecosystem consists of the Ethereum network, ETH staking infrastructure, Ethereum layer 2 chains, and Ethereum-based DeFi infrastructure.
“We expect SEC to approve the ETH ETF over the next 12 months,” stated Bernstein. “We stack the chances of ETH ETF approval by April/August 2024 at 50%. Ethereum is the only other digital asset likely to get an approved ETF this cycle>
Finally, other leading Blockchain ecosystems, such as Solana, BNB chain, Avalanche, Aptos, and SUI, are expected to reach $1.4 trillion.
“We expect Solana to lead the charge of fast throughput blockchains, which offer a more optimum design and user experience for more consumer-driven applications i.e., stablecoin payments and consumer gaming,” concluded the firm.