The firm cites a shift from sentiment-driven to structurally-driven demand in Bitcoin markets, led by institutional interest and inflows into ETFs. As Bitcoin resumed its upward trajectory after dipping to a low of around $57,000, Bernstein noted the clearing of excess leverage in futures contracts and a positive reversal in ETF outflows.
A major highlight was the Grayscale Bitcoin Trust (BTC) (NYSE:GBTC) reporting its first inflow after 78 consecutive days of outflows, a milestone given its impact on market dynamics.
“Bitcoin’s current position at around $64,000 is just the beginning. The structure of the market is far stronger than during the 2021 euphoria at similar levels, largely driven by clear ETF-driven demand,” the report reads.
The bullish outlook is further supported by the sheer volume of cash flooding into Bitcoin ETFs, amassing nearly $12 billion within just three months of their launch. Bernstein expects this trend to persist, driven by increased allocations from private banks, wealth managers, and institutional investors, projecting around $70 billion in new inflows between 2024 and 2025.
The report also points to favorable regulatory developments and corporate adoption, citing companies like Block integrating Bitcoin into their treasury strategies. Moreover, the stability in Bitcoin’s hash rate post-halving and healthy miner transaction fees indicate a resilient mining sector poised for long-term market growth.
Bernstein expects that higher Bitcoin prices and transaction fees will offer miners a buffer even if production costs double post-halving.
Mining stocks have lagged behind the Bitcoin rally due to investors favoring a “long Bitcoin, short miners” strategy. The rationale behind this approach is the perceived safety in buying spot ETFs compared to mining stocks, which are susceptible to risks associated with the halving.
“Bitcoin mining dynamics are also supporting the market, with public miners expanding capacity and negotiating favorable terms amidst competitive pressures from AI capital expenditures,” Bernstein added.
With all these factors in place, Bernstein remains confident in their $150K Bitcoin target, viewing current prices as an attractive risk-reward opportunity for investors. The firm believes we are in the early stages of a longer and healthier Bitcoin cycle that could extend well into 2025.
Source: Cryptocurrency - investing.com
