Source: CNBC
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A Future Without Hezbollah
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Friday 12 January 2024 14:53:18
Crypto Bulls See Bitcoin Flying Above $100,000 After ETF Approval
Cryptocurrency bulls say bitcoin could surge to more than $100,000 this year after the U.S. Securities and Exchange Commission made a pivotal step to approve the first-ever U.S. spot bitcoin exchange-traded fund.
Several crypto investors CNBC spoke with said they see the world’s top cryptocurrency rising in 2024, as the effects of approval of a bitcoin ETF, which would diversify the range of investors that can gain exposure to the cryptocurrency, begin to become more apparent.
Bitcoin’s price hasn’t moved a great deal since the news of the SEC ETF approval came in, which saw the agency give 11 products the green light.
The regulator approved rule changes to allow the creation of the ETFs, but stressed that this move “should in no way signal the Commission’s willingness to approve listing standards for crypto asset securities.”
Prices reacted to that substantially since the SEC’s move Wednesday. Bitcoin’s price was trading at $46,118 apiece Friday, down around 0.4%.
It briefly topped $49,000 to levels not seen since December 2021.
Over time, though, ETFs, coupled with other developments in the crypto world, are expected to drive major upward movements in bitcoin.
What’s a bitcoin ETF?
ETFs allow more retail investors to hold bitcoin indirectly via a share traded on a stock exchange. Investors expect acceptance of the token could begin to become more mainstream with more and more institutions like BlackRock, Fidelity, and others offering these products.
Anthony Scaramucci, founder of SkyBridge Capital, said he’s been increasing his exposure to bitcoin, ethereum, solana and other cryptocurrencies over the past year.
“I think this is a really big breakthrough for bitcoin as a digital asset, it’s a much broader story for digital property in general,” Scaramucci told CNBC’s Arjun Kharpal at the CfC conference in St Moritz.
“I think bitcoin will probably see its all-time high at the end of the year, and is likely to go through its all-time high by the end of the year.”
As for what price Scaramucci expects for bitcoin, the noted investor said he sees the cryptocurrency hitting $100,000 over the next year.
“Could bitcoin be $100,000, which is more or a little bit more than a double over the next year? I do believe that.”
But he made a caveat: “I have been wrong so many times before.”
‘Digital gold’
He compared the token’s ETF approval to the 2004 green lighting of the first spot gold ETF. That development took years to translate into major price gains, but gold eventually skyrocketed in value.
The precious metal is now worth around $1,592.76, up around 556% since 2004 when the SPDR Gold Shares ETF began trading. Crypto bulls expect a similar direction of travel for bitcoin — except it’ll be much quicker this time around.
“We see it as digital gold,” Scaramucci told CNBC. “If you look at the market cap of gold, $13 trillion, there’s no reason why bitcoin couldn’t be 50% or 60% of that market capitalization. So that implies a 10x price over then next decade.”
Many crypto investors have compared bitcoin with gold in the past. But it’s worth noting that, while backers believe they have similar qualities — like a finite supply and immunity to external economic and geopolitical headwinds — bitcoin hasn’t exactly passed the mark as “digital gold.”
Past price performance over the past few years has shown bitcoin trades in correlation with stocks, in particular the tech-heavy Nasdaq, rather than gold.
Bitcoin did massively outperform the Nasdaq in 2023, many other risk-assets, and gold in 2023.
But the cryptocurrency primarily got a boost from speculation that the Federal Reserve would dial back its aggressive interest rate rises, which would be supportive for risk assets like cryptocurrencies.
Vijay Ayyar, vice president of international for Indian crypto exchange CoinDCX, said ETF approvals had been “priced in for some time now.”
Bitcoin’s already gone from about $25,000 to nearly $47,000 since October.
“The next leg up is when we start seeing Bitcoin purchases for the ETF itself,” Ayyar said. That could happen in the next week or two.”
“If sentiment is to be believed, we are potentially looking at an accelerated move to new all-time highs some time this year, given we also have the Bitcoin halving coming up in April this year,” Ayyar added.
2023 was bitcoin’s turnaround year
If bitcoin were to reach those levels, it would mark a turnaround for an industry that’s been in the doldrums since the collapse of FTX, the once $32 billion crypto exchange, in 2022. FTX’s founder Sam Bankman-Fried was found guilty of all seven criminal counts brought against him by federal prosecutors in the U.S. last year.
In 2022, bitcoin was already falling sharply, with sky-high inflation and higher interest rates knocking prices of digital currencies across the board.
But FTX’s collapse caused deep distrust in the crypto industry among consumers, business players in the industry and regulators, as one of the largest names in the field was exposed for using assets it held on behalf of customers to make risky trades in other crypto assets and risky crypto-linked derivatives.
The crypto market saw a little over $2 trillion erased from its market capitalization, as investors got cold feet and abandoned digital tokens en masse.
In 2023, however, it was a different story. Bitcoin’s price rose more than doubled for the year, with the token’s price climbing some 152%. Other digital tokens also saw price gains. Ether roughly doubled in price, and XRP, solana, and ada also made strong gains.
“2022 was the worst year for us [but] 2023 happened to be the best year for us. So it’s been the best and worst of times,” Scaramucci said.
Also in 2023, Binance CEO and founder Changpeng Zhao pleaded guilty to criminal charges and stepped down as the company’s CEO as part of a $4.3 billion settlement with the Department of Justice. Many crypto investors see this as a chance to move forward and draw a line under bad behavior in the industry.
Industry executives are calling the start of another bull run. They say that, on top of the approval of a bitcoin ETF, the bitcoin “halving” is a factor that will drive gains in 2024.
The halving, which happens every four years, is an event written in bitcoin’s code. The rewards so-called miners get for mining bitcoin is cut in half. This keeps a cap on the supply of bitcoin, of which there will only ever be 21 million. In previous price cycles, halving preceded a rise in the price of bitcoin.
$250,000 by July?
Tim Draper, founder of Draper Associates, believes the bitcoin halving — along with other factors — could spur the price of bitcoin to hit $250,000 by July.
The billionaire investor said he sees increased bitcoin adoption among mainstream investors and the token’s much-anticipated halving event driving it to a new all-time high.
“The halvening, more usage of a currency that is decentralized, trusted, global, [and that] stores value from anywhere,” are all factors that are supportive of bitcoin at the moment, Draper told CNBC.
A major part of Draper’s thesis is that women will drive the adoption of bitcoin in 2024 and beyond.
The investor told CNBC that women “will start to see the need to have at least some bitcoin in case of a run on dollars.”
It’s worth noting Draper, who first invested in bitcoin in 2014, has been wrong about the token’s price trajectory.
He told CNBC in late 2022 that he thought bitcoin would reach $250,000 by June 2023. Draper then said in July 2023 that investors will have to wait “a little longer (maybe 2 years) for bitcoin to hit his $250,000 target.
And despite successful bets on Tesla, Baidu and Skype, Draper’s broader venture investing track record hasn’t been pristine.
The investor once backed Theranos, the controversial blood-testing startup that collapsed after its founder Elizabeth Holmes was accused of defrauding investors. Rather than call her out, Draper doubled down on his support for the entrepreneur, saying he believed critics had “taken down another icon.”
But Draper isn’t the only investor bullish on bitcoin. Tom Lee, managing partner at Fundstrat Global Advisors, told CNBC’s “Squawk Box” on Wednesday that bitcoin could hit $150,000 in the next 12 months, and as much as $500,000 in five years.
And Meltem Demirors, chief strategy officer of CoinShares, told CNBC’s Arjun Kharpal she thinks bitcoin can reach the $100,000 mark — she made that comment before the ETF approval, in response to a question on a hack that led to the SEC falsely posting that it had approved the ETFs late Tuesday.
“I think we are going over six figures by the end of the year,” Demirors said, highlighting two key reasons: a bitcoin ETF approval and the so-called upcoming “halving” event.