BlackRock ETF Demand Could Fuel Rally to $180,000

• The price of bitcoin could soar to $180,000 before the scheduled April 2024 halving, according to Fundstrat.
• Fundstrat said a bitcoin ETF from BlackRock could drive a boost in daily demand for the crypto token.
• If the SEC approves a bitcoin ETF from BlackRock, it could lead to the largest ETF launch ever.

The price of bitcoin could soar 521% from current levels to $180,000 before the cryptocurrency’s scheduled halving in April 2024, according to a Monday note from Fundstrat.

The investment research firm said that while bitcoin’s daily demand of about $25 million is equivalent to daily mining rewards of about $25 million, that could change with the potential launch of a bitcoin ETF.

A bitcoin ETF could add an extra $100 million in incremental daily demand for bitcoin, according to the note. That increase, combined with the April 2024 halving set to slash daily mining rewards to $12 million, means the price of bitcoin would have to rise substantially to meet an equilibrium among buyers and sellers.

“This [bitcoin ETF launch] would bring daily demand to $125 million, while daily supply is only $25 million. The implied equilibrium price would need to rise so daily supply matches daily demand. Equilibrium analysis suggests that a clearing price is $140,000 to $180,000, before the April 2024 halvening,” Fundstrat said.

Halving, also known as halvening, is seen as bullish for bitcoin, as cutting the reward given to miners in half is cap to limit the supply of bitcoins and has historically led to price increases.

In a note to clients earlier this month, Fundstrat’s head of digital asset strategy, Sean Farrell, explained that a multiplier effect in the range of 4.0x to 5.0x is reasonable to assume for the bitcoin network.

“This means that $1 of demand can result in a $4 to $5 increase in market cap,” Farrell said.

Farrell sees a 75% probability that a spot bitcoin ETF is approved in the near term as a number of firms, including BlackRock and Fidelity, await word from the SEC on their application filings.

“We anticipate [a bitcoin ETF] would attract new investors and generate increased demand for bitcoin,” Farrell said.

And if approved, a bitcoin ETF from BlackRock could lead to one of the biggest ETF launches on record, Fundstrat said, adding that it could ultimately break the record holder, the Invesco QQQ ETF, in its first year of inflows. The QQQ ETF, which tracks the Nasdaq 100, attracted $36 billion in inflows in its first year following its March 1999 launch.

Fundstrat said bitcoin ETFs could eventually eclipse the precious metals ETF market, which holds nearly $230 billion in assets. 

“Bitcoin ETF eventually could become >$300 billion category,” Fundstrat said. And that surge in demand is what could help put a triple-digit price tag on bitcoin. 

Fundstrat isn’t the only firm with a $100,000+ price target for bitcoin. Earlier this month, Standard Chartered said a positive feedback-loop could propel the cryptocurrency past $120,000 next year.