1 Top Cryptocurrency to Buy Before It Soars 700% to 2,900%, According to Certain Wall Street Analysts
Trevor Jennewine, The Motley Fool
The value of Bitcoin (CRYPTO: BTC) is determined by the balance between its supply and demand. With a capped supply of 21 million coins, changes in demand become the sole influential factor in determining Bitcoin’s future price direction. Therefore, the price of Bitcoin will largely depend on whether demand rises or falls from its current level.
Given this perspective, specific Wall Street analysts anticipate that two factors will significantly increase demand for Bitcoin in the coming years. They speculate that this surge in demand could propel the cryptocurrency to rise by 700% or even more from its current value of approximately $50,000 by the end of the decade. Here’s what investors should be aware of.
Recent developments strengthen the investment thesis for Bitcoin
A recent report from Fidelity highlighted various indicators pointing to an increasing demand for Bitcoin. Metrics such as monthly active addresses, monthly new addresses, and monthly transactions are all showing upward trends. Additionally, the illiquid supply of Bitcoin, representing the portion that hasn’t been moved in over a year, is nearing a record high and continuing to rise, indicating a growing number of investors are holding onto the cryptocurrency. Moreover, the number of accounts holding at least 0.1 Bitcoin reached an all-time high in December 2023.
In addition to these trends, there are two potential drivers that could further increase demand for Bitcoin down the line. Firstly, the Securities and Exchange Commission (SEC) has recently greenlit several spot Bitcoin exchange-traded funds (ETFs). These investment instruments offer direct exposure to Bitcoin without the need for investors to navigate the complexities of purchasing and securely storing the cryptocurrency themselves. With this reduction in barriers, spot Bitcoin ETFs have the potential to attract a broader range of retail and institutional investors to the market. In fact, the combined inflows across spot Bitcoin ETFs during their inaugural month of trading surpassed the inflows of any other ETF launch in history.
Another factor driving potential demand for Bitcoin is the scheduled halving event, where Bitcoin mining rewards are cut in half every 210,000 blocks, occurring roughly every four years. The next halving is slated for April, and it is expected to bolster demand by alleviating selling pressure. Essentially, miners sell Bitcoin to generate revenue from their operations, but following the April halving, they will have 50% fewer Bitcoins to sell.
There is a historical precedent for Bitcoin increasing in value after mining rewards are cut in half, as shown in the table below.
| Halving Event | Bitcoin Return (2 Years Later) |
|---|---|
| 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, the founder and managing partner of Skybridge Capital, shared with podcast host Scott Melker that he believes Bitcoin could hit $240,000 within 18 months following the April halving event. Additionally, Scaramucci expressed his belief that Bitcoin will ultimately attain half the market capitalization of gold, which would translate to a per-coin value of approximately $400,000. This implies a potential upside of 700% from its current price of $50,000.
Tom Lee, the managing partner and head of research at Fundstrat Global Advisors, shared with CNBC that he believes Bitcoin could surge to $500,000 within the next five years, suggesting a potential upside of 900% from its current price. Lee pointed to the finite supply of Bitcoin and the potential for a significant increase in demand with the approval of spot Bitcoin ETFs. He expressed his view that achieving a value of around half a million dollars within five years could be feasible, stating this in January.
Cathie Wood, the founder and CEO of Ark Invest, shared her Bitcoin valuation model with CNBC. Her conservative estimate predicts a value of around $600,000 by 2030, suggesting a potential upside of 1,100% from its current price. However, her more optimistic scenario envisions Bitcoin reaching $1.5 million by 2030, indicating a potential upside of 2,900% from its current price. Wood emphasized that the approval of spot Bitcoin ETFs increases the likelihood of the bullish scenario.
Investors should understand the risks before buying Bitcoin
The potential future value of Bitcoin may exceed its current worth significantly. However, investors must grasp the associated risks to make well-informed decisions.
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