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1 Top Cryptocurrencies to Buy Before They Skyrocket 700% to 2,900%, According to Some Wall Street Analysts
The price of Bitcoin (CRYPTO: BTC) is based on supply and demand. However, since the supply will never exceed 21 million coins, the demand for cryptocurrency is the only important variable. This means that the future price trajectory of Bitcoin depends entirely on whether demand increases or decreases from its current level.
With this in mind, some Wall Street analysts believe that two catalysts will drive demand for Bitcoin in the future, so much so that the cryptocurrency could soar 700% or more from its current price of around $50,000. by the end of the decade. Here’s what investors should know.
Recent Developments Strengthen the Investment Thesis for Bitcoin
A Fidelity report recently identified several signs of growing demand for Bitcoin. Monthly active addresses, monthly new addresses, and monthly transactions are all trending upward. The illiquid supply of Bitcoin (i.e. the percentage that has not changed in more than a year) is near an all-time high and trending upward, meaning that more and more of investors hold Bitcoin. cryptocurrency. And the number of accounts with at least 0.1 Bitcoin reached an all-time high in December 2023.
Beyond these trends, two catalysts could create more demand for Bitcoin in the future. First, the Securities and Exchange Commission recently approved several spot Bitcoin exchange-traded funds (ETFs). These investment vehicles provide direct exposure to cryptocurrency without having to purchase and store Bitcoin. By reducing friction, spot Bitcoin ETFs could attract more retail and institutional investors to the market. Indeed, the collective inflows into spot Bitcoin ETFs in the first month of trading were greater than the inflows of any other ETF launch in history.
Second, Bitcoin mining rewards are reduced by 50% every time 210,000 blocks are added to the blockchain, which happens approximately once every four years. The next halving event is expected to take place in April and will effectively boost demand by reducing selling pressure. To be more precise, miners are selling Bitcoin to monetize their operations, but they will have 50% less Bitcoin to sell after the April halving event.
There is historical precedent that Bitcoin increases in value after mining rewards are halved, as shown in the chart below.
|
November 2012 |
2,964% |
|
July 2016 |
922% |
|
May 2020 |
348% |
Data source: Fidelity Digital Assets.
Several financial professionals have issued bullish price targets for Bitcoin
Anthony Scaramucci, founder and managing partner of Skybridge Capital, recently told podcast host Scott Melker that Bitcoin could reach $240,000 within 18 months of the April halving event. Scaramucci also said that Bitcoin would eventually reach half the market capitalization of gold, bringing its value per coin to around $400,000. This implies a 700% upside from its current price of $50,000.
The story continues
Tom Lee, managing partner and head of research at Fundstrat Global Advisors, recently told CNBC that Bitcoin could reach $500,000 in the next five years, implying a 900% upside from its current price. “Supply is limited and we now have a potentially huge increase in demand with spot Bitcoin. [ETF] approval, so I think in five years, about half a million would potentially be achievable,” Lee said in January.
Cathie Wood, founder and CEO of Ark Invest, recently discussed her Bitcoin valuation model with CNBC. Its benchmark valuation is around $600,000 by 2030, implying an upside of 1,100% from its current price. But its bullish valuation is $1.5 million by 2030, implying a 2,900% upside from its current price. Wood said the one-time approval of the Bitcoin ETF makes the bull case more likely.
Investors should understand the risks before buying Bitcoin
Bitcoin could be worth more (maybe a lot more) in the future. But investors can’t make informed decisions without understanding the risks.
First, historical data is limited. Bitcoin was created less than twenty years ago, while stocks and bonds have been around for centuries. This makes speculation difficult when it comes to Bitcoin. For example, its performance during a deep recession is unprecedented.
Second, Bitcoin has always been quite volatile. It has fallen at least 50% from its record three times in the past five years, and it plunged more than 75% during the latest cryptocurrency market crash. Investors should expect this volatility to persist in the future.
Third, Bitcoin has been associated with fraud, money laundering and other criminal activities. Some countries have banned cryptocurrency and other countries continue to put regulatory frameworks in place. Future changes in the regulatory landscape could dampen demand for Bitcoin.
Investors who are patient and comfortable with these risks should consider buying Bitcoin today.
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Trevor Jennevine has no position in any of the stocks mentioned. The Motley Fool posts and recommends Bitcoin. The Mad Motley has a disclosure policy.
1 Top Cryptocurrencies to Buy Before They Skyrocket 700% to 2,900%, According to Some Wall Street Analysts was originally published by The Motley Fool