Bitcoin hitting $50,000 this year doesn’t seem overly optimistic to me
Bitcoin hit a 17-month price high on Tuesday amid rising confidence that US financial regulators will imminently approve stock market funds that invest directly in the cryptocurrency.
The price of the digital currency leapt more than 10% in 24 hours this week to $35,000 as traders are growing increasingly convinced the Securities and Exchange Commission (SEC) will approve at least one exchange-traded fund (ETF) in the coming months.
It follows a price spike last week when the Bitcoin price jumped 7% in 10 minutes on fake news reports that the SEC had already green-lit an ETF by BlackRock, the world’s largest asset manager.
The reality, however, is that the regulator is due to make its first rulings on the ETF filings at the beginning of next year. Several major Wall Street names, including VanEck, Invesco and Wisdom Tree, have filed applications.
These spikes of optimism on this issue suggest to me that a spot ETF is not yet fully priced-in and as we draw nearer to the period (likely first-quarter of 2024) we’ll see steady gains in the Bitcoin price.
We expect that Bitcoin could reasonably reach $50,000 by the end of the year.
ETFs provide a convenient way for traditional investors to gain exposure to Bitcoin. Many investors, particularly institutional ones, have been hesitant to invest directly in cryptocurrencies due to regulatory concerns and security issues. The approval of ETFs offers a regulated and insured avenue for them to invest in Bitcoin.
Many also argue that ETFs make it easier for investors to buy and sell Bitcoin, increasing its liquidity. Higher liquidity often leads to price appreciation as more investors enter the market, resulting in increased demand and, consequently, higher prices.
But the most important aspect – and why an approval would be a landmark moment in crypto – is that SEC-approved Bitcoin ETFs would be seen as a sign of legitimacy and mainstream adoption by regulatory authorities.
This game-changer would attract more retail and institutional investors who were previously cautious about the cryptocurrency, further boosting demand.
However, at this stage, it’s important to note that regulatory approval is not guaranteed.
But, as we’ve seen, speculation is driving prices enormously and it’s not even a done deal – as yet. If we’re seeing 10% surges already, imagine what is likely to happen should the regulator of the world’s largest economy approve ETFs in early 2024.
Therefore, $50,000 in the fourth quarter of this year seems to me at least highly plausible.
Nigel Green, deVere Group CEO and Founder