Exemplary Index Fund to Purchase Prior to a Potential 450% Surge Under Donald Trump's Presidency, Suggests a Wall Street Analyst
Exemplary Index Fund to Purchase Prior to a Potential 450% Surge Under Donald Trump's Presidency, Suggests a Wall Street Analyst
experienced analysts from Bernstein, headed by Gautam Chhugani, projected that if Trump triumphantly secured another presidential term, Bitcoin (BTC) would soar to an astounding $90,000. Surprisingly, a week following the election results and Trump's victory announcement, Bitcoin miraculously touched the $90,000 mark for the very first time.
Bernstein anticipates even higher peaks. Chhugani and his associates believe Bitcoin is on the brink of an extensive, multi-year breakout, potentially catapulting its value to an extraordinary $500,000 by 2029. This prediction implies an impressive 450% increase from its current price of $90,000. Moreover, this means a comparable upsurge for the iShares Bitcoin Trust (IBIT), a stock fund that correlates with Bitcoin's price.
This positive outlook is partly influenced by the expectations of favorable cryptocurrency policies under the Trump administration, including the establishment of a strategic Bitcoin reserve. However, Bernstein believes that Spot Bitcoin ETFs will drive even more institutional investments into the market, thereby boosting Bitcoin's value. Price targets should always be met with skepticism, but these factors provide strong reasons for investing in the iShares Bitcoin Trust.
The Launch of Spot Bitcoin ETFs has broken new records
Spot Bitcoin ETFs entered the market following the approval by SEC in January 2024. Significantly, over a period of 10 months, these ETFs accumulated over $28 billion in net inflows, making it the most successful ETF launch in history, according to Gautam Chhugani from Bernstein.
Notably, the iShares Bitcoin Trust emerged as the standout performer amongst this group. Within two months, its asset value soared to $10 billion thanks to its low fees and BlackRock, one of the world's largest asset managers, as its issuer. This milestone was reached far more quickly than any other ETF, according to The Wall Street Journal.
The bullish forecast revolves around Bitcoin's price, which is primarily influenced by supply and demand, with demand being the decisive variable as supply is capped at 21 million coins. Spot Bitcoin ETFs could potentially stimulate demand by reducing friction, making it easier and cheaper for investors to add Bitcoin exposure to their existing brokerage accounts, rather than transacting through separate cryptocurrency exchange accounts.
Institutional Investors are Paving the Way for Bitcoin
Spot Bitcoin ETFs could encourage the adoption of Bitcoin as a standard corporate treasury asset. Although companies like MicroStrategy hold 279,420 BTC, which translates to approximately $25 billion, the majority of firms have yet to incorporate Bitcoin into their balance sheets. The rising number of favorable cryptocurrency policies under Trump's administration could potentially shift this trend.
Trump has even suggested making Bitcoin a reserve asset, while Senator Cynthia Lummis (R-Wyo.) has proposed the Bitcoin Act of 2024. This legislation suggests transferring the 207,000 BTC stored by the U.S government to the Treasury and obligating the Secretary of the Treasury to purchase an additional million BTC over a five-year period.
At present, most experts concur that Bitcoin's transformation into a reserve asset is highly improbable in the short term. Mike Novogratz, CEO of Galaxy Digital, dismisses the likelihood, stating, "I think it's a low probability. While the Republicans control the senate, they don't have close to 60 seats." However, even under these circumstances, most experts agree that the odds are better in a Trump administration than they otherwise would have been had Kamala Harris won the election.
Bitcoin's Volatility is Likely to Continue
Bitcoin has surged by 30% since Trump's victory in the U.S. presidential election. However, investors should remember that Bitcoin has plunged by more than 30% from record highs on various occasions during the last decade. Typically, it takes at least a year for its value to recover. This degree of volatility can be expected to persist in the future as well.
Investors who are uncomfortable with such significant drops should avoid Bitcoin and Spot Bitcoin ETFs. On the contrary, investors who are resilient enough to endure such volatility should consider bolstering their portfolio with Bitcoin exposure, and the iShares Bitcoin Trust is an ideal tool for achieving this goal.
Following Bernstein's prediction, investors are actively considering bolstering their portfolios with Bitcoin exposure through the iShares Bitcoin Trust, given its potential for significant growth. The launch of Spot Bitcoin ETFs has broken records, with the iShares Bitcoin Trust accumulating over $10 billion in assets within just two months, making it the quickest ETF milestone in history.
Moreover, the positive outlook towards Bitcoin in the Trump administration, including potential favorable cryptocurrency policies and the suggestion of making Bitcoin a reserve asset, is further encouraging institutional investors to invest in Bitcoin. Despite Bitcoin's volatility, many investors remain resilient and view this as an opportunity to add Bitcoin exposure to their portfolios.