Bitcoin is currently trading around the $66,000 mark, having briefly reached an all-time high of $69,170.63 yesterday (Tuesday) and looking likely to keep on surging ahead.
While there has been plenty of coverage around reaching this huge milestone, Bernstein analyst Gautam Chhugani notes that one notable emotion associated with such a surge is missing – euphoria. And that is really a good thing.
“Let’s say, we feel comfortably numb,” says Chhugani on the matter. “We are still saying Bitcoin is going to $150K this cycle. We have been around long (on crypto time scale), having seen the heady highs of 2021, the 2022 apocalypse and the slight glimmer of hope in 2023. Despite a 400% BTC rally since the lows, we sense more doubters than fans, hinting the price action could upset a lot of Bitcoin bears with plenty of room to run.”
The major difference for this run is that Bitcoin is finally getting the seal of approval from the establishment. While hardcore BTC zealots will be keen to point out the irony in the fact Bitcoin came into being as a currency set up to offer a counter to the financial mainstream, the cold facts show that the recent approved spot Bitcoin ETFs have been a huge success.
With Bitcoin’s supply set at a maximum of only 21 million coins meaning there won’t be any more coming into circulation once that total is mined, there is a limited supply available. And as Chhugani notes, “When you open up ETF capital pools for a digital commodity with limited supply, the only price direction is up.”
Since the launch, the ETFs have loaded up at a rate of $200 million BTC a day. At the same time, on exchanges and on OTC desks, the Bitcoin supply is at an all-time low and the situation will probably only get more extreme, since the Bitcoin mining supply is about to half in around 50 days (Halving on April 20). Not to mention, the Blackrock Bitcoin ETF represents the fastest ETF ever to exceed $10 billion in assets under management. The ETFs’ success, says Chhugani, will have a “positive ripple effect within the entire ecosystem of financial markets.” With the halving fast-approaching, the analyst sees further gains ahead, expecting 2024 to be a “break-out inflection year for crypto.”
So how should stock market participants prepare for this development? Chhugani has both a general and specific idea about that. “We recommend achieving Bitcoin exposure via Bitcoin miners, that offer a higher-beta than Bitcoin driven by EBITDA expansion and market multiple growth into the bull cycle. Riot Platforms (NASDAQ:RIOT) and CleanSpark (NASDAQ:CLSK) are our preferred picks,” Chhugani noted. “We prefer RIOT and CLSK as market share consolidators with strong operational edge (Self-mining), low cost of production (low power cost), high liquidity and balance sheet flexibility.” (To watch Chhugani’s track record, click here)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
