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Bitcoin, Crypto-Related Stocks Are Ripe for Institutional Adoption: Bernstein

Jun 18, 2024
  • Crypto markets are on the cusp of further institutional adoption, the broker said.
  • Spot bitcoin ETFs will be approved by major wirehouses and large private bank platforms in the third and fourth quarters, the report said.
  • Bernstein predicts that bitcoin will reach a cycle high of $200,000 in 2025, $500,000 by 2029 and $1 million by 2033.
As an experienced financial analyst, I believe that the crypto markets are poised for significant institutional adoption in the coming quarters. The approval of spot bitcoin ETFs by major wirehouses and large private bank platforms is a clear indication of this trend. While some may argue that most institutional demand has been for the basis cash and carry trade, I see these investors as evaluating net long positions as they become more comfortable with improving ETF liquidity.As a researcher, I’ve come across an intriguing observation in a recent report by broker Bernstein. According to their analysis, Bitcoin (BTC) and crypto-linked stocks are currently underestimated and present significant opportunities for institutional investment.

Bernstein points out that critics of crypto believe that trading in the bitcoin spot exchange-traded fund (ETF) has peaked, with many early investments coming from individual investors rather than institutions. They argue that most institutional interest lies in the “basis cash and carry trade,” which doesn’t involve new net long positions for bitcoin.

As researchers, we’ve observed that bitcoin Exchange-Traded Funds (ETFs) are on the verge of gaining approval at significant financial institutions like major wirehouses and large private banking platforms during the third and fourth quarters. The approval of spot bitcoin ETFs for the first time in the United States in January marked a significant milestone, expanding access to investing in Bitcoin for a larger audience.

The authors argue that the institutional basis trade serves as a “disguised catalyst for acceptance,” and these investors are presently reassessing their net long positions in this strategy as they gain confidence in the increasing liquidity of Bitcoin ETFs. This trading approach involves simultaneously purchasing the spot Bitcoin ETF and selling the corresponding futures contract, and subsequently waiting for the prices to align.

As a researcher, I have come across some intriguing insights regarding Bitcoin Exchange-Traded Funds (ETFs). The report indicates that we can anticipate a significant increase in inflows during the third and fourth quarters. Moreover, the next phase of adoption will be fueled by major financial advisors endorsing these ETFs and utilizing the available space in their existing portfolios for allocation.

A broker anticipates that the price of bitcoin will reach approximately $200,000 by the end of 2025, $500,000 around 2029, and surpass the $1 million mark by 2033.

Bernstein recommends buying Riot Platforms (RIOT) and CleanSpark (CLSK), two bitcoin mining companies, along with software firm and bitcoin investor MicroStrategy (MSTR and trading platform Robinhood (HOOD), based on their outperform ratings.

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2024-06-19 13:16