The cryptocurrency market is notably volatile. That can lead to some staggering drops in value, but it can also produce some amazing returns in a short amount of time.
Bitcoin (BTC 0.71%) soared to a new all-time high earlier this year amid fervor of new spot Bitcoin ETFs coming to the market. The biggest cryptocurrency in the market saw its value increase 177% from its October lows to its $73,750 high in March. It's since pulled back to around $60,000 per Bitcoin, as of this writing.
A pair of Wall Street analysts think Bitcoin could be set for another surge in its price over the next six months, reaching $150,000 by the end of 2024, a 150% increase. Fundstrat's Tom Lee and Standard Chartered's Geoff Kendrick each expect the cryptocurrency to zoom past its all-time highs later this year.
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The most recent challenge for Bitcoin is nearly behind it
Bitcoin's price is primarily determined by supply and demand. Earlier this year, the Bitcoin halving reduced the rate of the cryptocurrency's supply increase. Previous halvings have been bullish for Bitcoin, as demand growth outpaces supply growth. However, another big influx of supply remains a challenge for Bitcoin's price.
Just a few days after the most recent Bitcoin halving, the defunct Mt. Gox Bitcoin exchange, which filed for bankruptcy protection in 2014, provided good news for creditors. Mt. Gox was once the largest Bitcoin exchange in the world, but suffered a devastating hack in 2014, resulting in the loss of over 850,000 Bitcoin. In April, the Mt. Gox trustee said it will start returning some of the lost funds by October.
In late June, the trustee announced plans to begin disbursements in July. Two years ago, the Mt. Gox trustee held 142,000 Bitcoin, which is worth over $8.5 billion at today's price. If the creditors receiving their Bitcoin choose to sell, it could put a huge amount of downward pressure on Bitcoin's price. That potential selling pressure has been baked into the price of Bitcoin over the last few months.
CRYPTO: BTC
Key Data Points
But demand for Bitcoin is mostly based on future expectations. And the Mt. Gox settlement is nearly put to bed. Lee says that's a reason to invest in Bitcoin now. "That was a huge overhang for many years," he said in an interview with CNBC. "But if I was investing in crypto, knowing that one of the biggest overhangs is going to disappear in July, I think it's a reason to actually expect a pretty sharp rebound in the second half." He says $150,000 per Bitcoin is still possible by the end of the year.
Kendrick believes macro events like the U.S. election could have a significant role in the price of Bitcoin later this year. He sees a scenario where the cryptocurrency reaches $100,000 by election day and $150,000 by year-end.
This major source of demand will drive Bitcoin higher
The biggest potential driver of Bitcoin's long-term price appreciation is the growing adoption of the asset within institutional portfolios.
The new spot Bitcoin ETFs approved in January will usher in a new and easier way for institutional investors to invest in the cryptocurrency. Many hedge fund managers pounced on the opportunity. They had $4.2 billion invested in the Grayscale Bitcoin Trust (GBTC +2.18%) and another $3.2 billion in the iShares Bitcoin Trust (IBIT +2.21%), as of the end of the first quarter, according to SEC filings.
Inflows into the Bitcoin ETFs have died down in the second quarter, but the potential for broader adoption among institutional investors remains. Cathie Wood's Ark Invest expects Bitcoin to play a major role in institutional investor portfolios in the future. The analysts figure a 1% allocation of investable assets in Bitcoin will push the price of the cryptocurrency to $120,000, but they see potential for a much higher allocation.
As more institutions drive demand higher and supply growth continues to slow, there's plenty of room for the Bitcoin price to move higher. Whether it reaches $150,000 by the end of the year, it's hard to say. But the cryptocurrency does have a history of making large moves in a short amount of time. If you're bullish on Bitcoin, the best time to invest is now.
