As a seasoned crypto investor with over a decade of experience in this dynamic industry, I’ve seen my fair share of bull and bear markets. However, the current state of affairs seems to be pointing towards unprecedented growth for Bitcoin, with estimates of $100,000 or even higher not sounding as far-fetched as they once did.
Bitcoin (BTC) price predictions that are unusually high are quite frequent in this sector. Nevertheless, numerous financial analysts and investors anticipate that Bitcoin could surge to $100,000 within the upcoming year. Similarly, Matt Hougan, the chief investment officer at Bitwise, shares this optimistic outlook, expecting Bitcoin to exceed six figures.
Let’s take a look at data that supports a Bitcoin price run to $100,000 and above.
Spot Bitcoin ETF inflows highlight strong institutional demand
As a researcher, I’ve noticed that the escalating interest in spot Bitcoin Exchange-Traded Funds (ETFs) could be a key factor behind Bitcoin’s recent price surge. Since October 11th, these ETFs have attracted an impressive $2.11 billion in investments, demonstrating their growing appeal. Launched earlier this year, these ETFs now manage over $60 billion in assets, suggesting robust institutional interest and confidence in the digital currency market.
Looking at the broader economic picture, Hougan highlights the approaching November 5th presidential election in the U.S. Donald Trump, the Republican nominee for president, has shown firm backing for Bitcoin and the incorporation of cryptocurrencies within financial markets. On the other hand, Kamala Harris, another candidate, seems to favor a regulatory environment that could stimulate growth in crypto projects and businesses within the United States.
Soaring US debt highlights a government overspending problem
Furthermore, Hougan underscores the point that the U.S. government’s deficit has escalated to an unsustainable state, which is facilitated by the bipartisan decision to increase the debt limit.
Over the past two weeks, the United States public debt has skyrocketed by half a trillion dollars, setting a new record at $35.8 trillion. This rapid increase in government spending erodes the strength of the U.S. dollar, causing assets like Bitcoin, gold, and stocks to become more valuable due to their scarcity. Consequently, central banks might need to keep reducing interest rates to alleviate the strain of repaying the government’s debt.
As per Apollo’s data, U.S. public debt interest costs surpass $3 billion daily, which presents a challenging scenario for the Federal Reserve. Lowering interest rates often sparks inflation and could potentially overheat the economy. Additionally, Hougan suggests that recent economic aid initiatives by China are playing a role in Bitcoin’s price approaching the $100,000 mark.
Over time, Bitcoin has tended to mirror the growth of global base money, as represented by the M2 index (which covers bank deposits and money market funds). Essentially, an increase in liquidity often sparks a higher appetite for risk among investors. In times of robust economic growth, when the threat of recession is minimal, investors often look to secure returns that exceed traditional fixed-income investments.
Whales accumulating Bitcoin will cause a “supply shock”
According to an analysis from trusted author Woominkyu on CryptoQuant, the present accumulation trend seems reminiscent of the proportion seen in July 2020, a time when Bitcoin experienced a staggering 550% price increase over a span of mere six months.
It’s been noted by Hougan that large-scale Bitcoin holders have amassed approximately 1.6 million BTC over the last six months, based on CryptoQuant’s data. This accumulation has caused a “supply shortage,” as the current supply of coins for sale is insufficient to meet the escalating demand from institutional investors.
This article is for generd not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of CryptoMoon.
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2024-10-25 18:45