Bernstein Analyzes Bitcoin: Unprecedented Strength in Fundamentals

In a recent analysis conducted by brokerage firm Bernstein, Bitcoin (BTC) is forecasted to undergo a significant transformation, emerging as a major global macropolitical asset. The projected market capitalization is expected to exceed $3 trillion, marking a quadruple increase by the mid-2025 period. Analysts at Bernstein have highlighted the robust fundamentals of the cryptocurrency, emphasizing a unique scenario where 70% of the total Bitcoin supply has remained inactive over the past year. This stands out in Bitcoin's historical context, given its reputation for dynamic price movements fueled by supply constraints.

One imminent event that is expected to act as a positive catalyst is the anticipated bitcoin halving in April or May of the following year. Bernstein envisions a substantial reduction in monthly selling pressure from miners, with projections indicating a decline to below $500 million from the current level of approximately $1 billion. This estimation takes into account the prevailing BTC prices at $37,000.

The report also draws attention to the significance of a more favorable accounting treatment facilitated by the new guidelines from the Financial Accounting Standards Board (FASB). These guidelines empower companies to acknowledge mark-to-market gains on their bitcoin holdings, creating a more favorable environment for corporations to integrate bitcoin into their treasury assets.

Furthermore, the potential approval of a U.S.-listed spot bitcoin exchange-traded fund (ETF) is viewed as an additional supportive factor. The report suggests that a U.S. bitcoin ETF could secure approval in early 2024, with the Securities and Exchange Commission (SEC) actively reviewing applications from leading asset managers. Such an approval would streamline access to bitcoin for both corporate entities and individual investors.

The report concludes by emphasizing Bitcoin's role as a "debasement hedge," suggesting that its importance may amplify in response to potential debt monetization or a substantial economic slowdown in early 2024, particularly if interest rates over-adjust for inflation.

Read More: Blockchain Odyssey: Navigating the ETF Seas with Mike Belshe