Back in October, investment firm Bernstein predicted that Bitcoin (BTC 1.47%) would skyrocket to a price of $150,000 by mid-2025. At the time, Bitcoin was trading for around $35,000, the new spot Bitcoin ETFs had not yet been introduced, and the much-anticipated halving had not yet occurred.
Six months later, it's safe to say that everything is going according to plan. In fact, Bernstein recently doubled down on its $150,000 price forecast for Bitcoin. As they see it, the case for investing in Bitcoin has become more attractive than ever. So, despite the recent dip in price, should you be buying Bitcoin?
Follow the money
According to Bernstein, the primary factor in Bitcoin's favor right now are the new spot Bitcoin ETFs. Ever since their launch in January, they have accumulated more than $30 billion in assets under management. By just about any metric, they have been a huge success.
The top ETF by a wide margin is the iShares Bitcoin Trust (IBIT 3.04%), which has pulled in a staggering $17 billion all by itself. It now holds over 200,000 bitcoins, or more than 1% of all Bitcoin now in circulation. Until the very end of April, this ETF had a staggering 71-day run of positive inflows. This is one of the best performances of all time for a new ETF, and until recently, it seemed like the money was never going to stop flowing.
Image source: Getty Images.
While spot Bitcoin ETFs have been approved all over the world, from Canada to Hong Kong, they aren't even close to matching the new U.S. Bitcoin ETFs in terms of size. Back in October, Bernstein estimated that these U.S.-based ETFs would eventually account for 10% of all circulating Bitcoin, or about 2 million bitcoins.
That leads me to think that we still have quite a ways to go with this Bitcoin ETF cycle. Most notably, we are still only at a point where investment advisors are recommending a portfolio allocation of 1% for Bitcoin. What happens when they start moving that figure even higher, to the 5% level? One would expect the flood of new Bitcoin money to turn into a tsunami, as some originally expected back in October.
What about the halving?
The really good news is that, even if there is a slowdown in new investor flows into the Bitcoin ETFs, we have a second catalyst to bail us out: the halving. Granted, the halving, which took place on April 19, has been a bit of a nothing-burger to date. On April 19, the price of Bitcoin was $64,000. Heading into May, the price has actually dipped below $60,000.
But consider the bigger picture. There have been three previous Bitcoin halving cycles, each one approximately 12 to 18 months in duration. And in each previous Bitcoin halving cycle (in 2012, 2016, 2020), the price of Bitcoin has reached another all-time high after going on an absolutely epic bull market rally.
So there's still plenty of time for the halving to work its magic. Nobody -- except a cadre of brave Bitcoin bulls on social media -- seriously expected Bitcoin to skyrocket in value overnight. Bernstein expects Bitcoin to hit $90,000 by the end of this year before going on a monster rally in 2025.
Should you buy Bitcoin?
Given the above, Bitcoin looks like a strong buy right now. First and foremost, you have the impact of the Bitcoin ETFs. More money flowing into them over the foreseeable future should help to boost the price of Bitcoin. And, as a secondary factor, there's the halving. When taken together, it's easy to see why price forecasts for Bitcoin seem to be rising higher with every passing month.
Of course, a lot could still go wrong. Geopolitical tensions could boil over in a number of hotspots around the world. Or the U.S. economy could continue to stumble along. But I'll take my chances. Right now, I'm with Bernstein in thinking that Bitcoin could soar to $150,000 by mid-2025. If anything, more uncertainty in the world will only make Bitcoin a better buy than it already is.
