While the new Bitcoin ETFs have not yet sent Bitcoin soaring, another big catalyst is coming soon.
At the beginning of 2024, many people thought Bitcoin would easily reach a price of $100,000. This was because Bitcoin’s value had already increased by more than 150% to $45,000. Big financial firms had started to accept Bitcoin as a type of investment, and there were expectations that new Bitcoin funds would attract a lot of new money into Bitcoin.
The issue is that investing in Bitcoin through ETFs hasn’t worked out as planned. Since Bitcoin ETFs began trading on January 11, Bitcoin’s value has actually fallen by almost 10%. However, there’s no need to panic — the strategy for investing in Bitcoin is still changing, and there’s one big event for Bitcoin happening later this year. Together, these factors might be just what’s needed to make Bitcoin’s price soar.
Bitcoin ETF investment thesis: The sequel
The annoying thing about the original idea behind investing in Bitcoin ETFs was that the price of Bitcoin didn’t go up right away in January. Even though the new Bitcoin ETFs seem to be doing well at first, all the buying by big investors hasn’t made Bitcoin’s price increase. It seems like investors are just moving their money from one Bitcoin investment to another, without actually changing how much Bitcoin they have.
As you might guess, we’re seeing changes to the original idea. At the end of January, Ark Invest put out its “Big Ideas 2024” report. In this report, the company recommended a much larger amount of Bitcoin for investors to include in their portfolios than before. They previously suggested 6.2%, but now they’re saying 19.4% is the best amount.
That’s a radical change, and it also leads to some radical price targets for Bitcoin. According to Ark Invest, if you use the 19.4% assumption, and apply it to the world’s total investable asset base of $250 trillion, then you can arrive at a $2.3 million price target for Bitcoin. In essence, this would be a world in which every investor has gone wild for Bitcoin. Imagine not just huge Wall Street institutional investors, but also huge sovereign wealth funds, moving one-fifth of their assets into Bitcoin.
How much Bitcoin’s value increases this year mainly depends on how much money investors decide to put into cryptocurrencies. If most investors only put 1% of their money into it, reaching a value of $100,000 for Bitcoin might be more difficult than expected. However, if investors are ready to invest more—like 5%, 10%, or even 20% of their money—then Bitcoin’s value could skyrocket.
The Bitcoin halving
The Bitcoin ETF news may not be the biggest event for Bitcoin this year. Instead, the upcoming Bitcoin halving in April is very exciting. This halving could greatly increase Bitcoin’s value. Bitcoin has had three halvings before (in 2012, 2016, and 2020), and each time, the price of Bitcoin soared. For example, after the 2020 halving, Bitcoin’s price went up to nearly $69,000, its highest ever.
Will Bitcoin reach a new highest price ever? It’s important to remember that just because Bitcoin has done well in the past doesn’t mean it will do so again, so thinking it will definitely shoot up in value is risky. Also, remember that it could take between one to one and a half years to see the full benefits of the Bitcoin halving. This means the biggest impact of the halving might not be seen until sometime in 2025.
The idea behind investing in Bitcoin because of the “halving” event makes a lot of sense, just like the idea of investing in a Bitcoin ETF does. During a halving, the amount of Bitcoin miners get for adding a new block to the blockchain is cut in half. This leads to two main outcomes. Firstly, it makes Bitcoin rarer. Secondly, it causes Bitcoin to increase in value over time because there’s less of it available. Both of these effects could make Bitcoin more appealing to investors in the long run.
What could possibly go wrong?
I’m worried that as more people start using Bitcoin, it will change, especially its well-known ups and downs in value. If big investors keep buying Bitcoin and hold onto it, it might not jump in price as much as before.
This decrease in ups and downs is great if you’re looking for a stable investment that doesn’t need constant attention. But it’s bad if you’re hoping for huge, fast increases to reach prices like $100,000 or more.
So, I’m changing how I think about Bitcoin. I think it will become more stable and start to act more like other common investments. Because of this, its price might not jump around as much as before. But, I still believe Bitcoin could really increase in value and possibly reach over $100,000 by the end of this year.
Should you invest $1,000 in Bitcoin right now?
Think about this before you invest in Bitcoin:
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