Bitcoin
Bitcoin will reach $1 million because of this little-known phenomenon
Day by day, BitcoinThe unique characteristics of (CRYPTO:BTC), which make it different from any other asset in the world, are becoming increasingly recognized and understood by investors. The recent approval of spot Bitcoin exchange-traded funds (ETFs) will further this understanding, as these ETFs simplify the process for investors to gain exposure to Bitcoin.
Although the approval of spot Bitcoin ETFs has been widely celebrated as an unofficial seal of legitimacy, signaling that Bitcoin is here to stay, there is another crucial dimension to consider. Once this is fully understood, it will become evident that Bitcoin has the potential to reach the coveted price of $1 million.
Image source: Getty Images.
Understanding the current scenario
The approval of spot Bitcoin ETFs revolutionizes how the average investor, or retail investor, can add Bitcoin exposure to their portfolios. By simply purchasing shares of one of these ETFs through their brokerage, investors can now bypass the complexities of navigating cryptocurrency exchanges and managing digital wallets.
This development has the potential to significantly increase demand for the limited and decreasing supply of Bitcoin. However, as transformative as this increase in access for retail investors is, it will pale in comparison to the anticipated tidal wave of demand from institutional investors entering the market.
Before diving into the numbers, it is essential to understand who institutional investors are. For a long time, I heard Bitcoin enthusiasts claim that institutions were coming, but I never fully understood what that meant. Institutional investors are organizations that invest money on behalf of their clients. These include pension funds, retirement plans, sovereign wealth funds and hedge funds, among others. Essentially, they manage and invest large sums of money.
Prior to the approval of spot Bitcoin ETFs, institutions were prohibited from entering or hesitant to enter the Bitcoin market due to the complexities associated with owning digital assets. However, with the advent of these ETFs, institutions can now easily incorporate Bitcoin into their extensive portfolios, opening the door to a significant influx of institutional capital into the Bitcoin market.
It’s time to crunch some numbers
But what will be the impact of these institutions? On May 15, it was estimated that around 700 professional investment firms held around $5 billion in these Bitcoin ETFs in cash. Leading the way is Millennium Management, an investment firm that manages more than $64 billion, with $1.8 billion tied up in Bitcoin ETFs, about 3% of its total portfolio. But the list goes on and includes names like Morgan Stanley (the sixth largest bank in the US), Bracebridge Capital (a hedge fund that manages investments for Yale and Princeton) and even the Wisconsin State Investment Board.
The story continues
However, as it currently stands, retail investors are the primary owners of spot Bitcoin ETFs. Reports suggest that around 10% of all assets linked to ETFs come from institutions. But this number is growing and will continue to grow.
The influx of institutions into the Bitcoin market will likely be gradual, as they typically perform extensive due diligence before making allocations. Unlike retail investors, who can quickly enter the market by purchasing shares of an ETF, institutions often take time to research Bitcoin’s impact on their portfolios before making small allocations.
However, after doing their research, I think everyone will probably come to the same conclusion: Bitcoin’s inherent characteristics make it a necessity in wallets. Eventually, widespread adoption among institutional investors will occur, leading to a tsunami of capital flow.
How much money is unknown, but based on recent studies that say a 5% allocation is the ideal amount of exposure, we can begin to estimate the potential impact of institutional investors. With 5% of the vast $129 billion in assets they manage, Bitcoin’s market capitalization could rise to more than $7 billion and its price could exceed $400,000.
However, some analysts argue that a 5% allocation may be too conservative. Most notably, a recent study from ARK Invest suggests that the ideal exposure level should be closer to 19%. If this happens, the price of Bitcoin could rise to more than US$1.3 million.
The little-known theory that comes into play
What we are witnessing marks the beginning of a fascinating phenomenon: game theory. In essence, game theory suggests that rational actors, in this case institutional investors, will act strategically in their best interests based on the actions of others.
As institutions watch their peers reap the benefits of Bitcoin investments, they will inevitably face pressure to join the fray or risk being left behind in the race for returns. This dynamic, driven by the desire to outperform peers and secure maximum returns, will likely fuel a surge in Bitcoin adoption and investment unlike any we have seen before.
While retail investors have played a significant role in Bitcoin’s journey thus far and continue to be an important group, the entry of institutions represents a paradigm shift. The scale and resources at its disposal will not only amplify the dynamics of the Bitcoin market, but also inject a new level of competition and urgency. As institutions vie for supremacy and seek to capitalize on Bitcoin’s potential, the game is expected to evolve in unforeseen ways and take Bitcoin to new heights.
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Prediction: Bitcoin will reach US$1 million because of this little-known phenomenon was originally published by The Motley Fool
Photo: Andrew Harnik (Getty Images)
After witnessing one of the largest global IT outages on record, affecting the travel, finance and healthcare sectors worldwideThis week is set to see more political drama, events, and earnings reports from tech giants.
Donald Trump’s ‘Lovefest’ Sets Jamie Dimon Up for Consideration for Treasury Secretary Job
Let’s take a look at what awaits us:
Major companies will release their earnings reports
Major tech companies and others will release their earnings reports this week, paving the way for what the second half of 2024 will look like.
Monday
- Verizon will report earnings before the start of operations.
Tuesday
- Coca-Cola, Comcast and UPS are all set to report earnings before the market opens.
- Tesla will report earnings in the morning, while General Motors will report earnings in the evening.
- Alphabet and Visa will report results after the market closes.
Wednesday
- AT&T will release its report before the market opens.
- Ford and Chipotle will report earnings after the market closes.
Thursday
- Earnings reports from AstraZeneca, American Airlines and Southwest Airlines will be released before the market opens.
Trump to speak at Bitcoin conference
Presumptive Republican presidential nominee Donald Trump will speak at the next Bitcoin Conference in Nashville, Tennesseewhich is scheduled for July 25-27. While this is the first time a presidential candidate will attend the conference, it has sparked a debate over whether the crypto-friendly Trump will receive support from the crypto community in the upcoming election.
In addition to Trump, independent presidential candidate Robert F. Kennedy Jr. will also discuss crypto during the conference. Crypto advocates such as ARK Investment’s Cathie Wood, MicroStrategy’s Michael Saylor, and whistleblower Edward Snowden are among some prominent names who will be participating in the conference.
Ether ETFs are on the way
New Ether Spot ETFs are set to begin trading on Tuesday, July 23. Much like the spot Bitcoin ETFs, these ETFs will allow investors to buy the second most popular cryptocurrency like stocks. BlackRock, Ark Invest/21Shares, VanEck, Grayscale, Fidelity, Bitwise, Franklin Templeton, and Invesco/Galaxy Digital are all set to offer Ether ETFs. Crypto asset manager Bitwise predict that trading in the Ether ETF will drive the price of Ether higher, potentially surpassing $5,000.
Bitcoin miners and cryptocurrency companies that have been blocked from going public in the U.S. could ultimately be the biggest winners in the digital asset world under a second Donald Trump presidency. Foreign companies at risk of losing market share could end up being the biggest losers.
That’s the view that’s taking hold among market participants and observers in the wake of the former president’s growing embrace of cryptocurrency as his chances of election grow. survey released Thursday by CBS News showed Trump with the majority — 52 percent — of likely voters in his likely November rematch with President Joe Biden.
Bitcoin
Bitcoin, Ethereum, Solana and Cryptocurrency Markets Look Ready to ‘Send’ as Stars Align, According to Investor Chris Burniske
Cryptocurrency investor Chris Burniske says Bitcoin (BTC), Ethereum (ETH), Solana (SUN) and the cryptocurrency market in general seem poised for a run.
Former Head of Cryptocurrency at ARK Invest account his 292,200 followers on social media platform X that several catalysts are aligning, suggesting that digital asset markets are on the verge of a bull run.
According to Burniske, a partner at venture capital firm Placeholder, the highly anticipated launch of Ethereum-based exchange-traded funds (ETFs), Republican presidential candidate Donald Trump speaking at an upcoming Bitcoin event, and the current state of the BTC, ETH, and SOL charts all suggest significant optimism for the cryptocurrency markets.
“With ETH ETFs set to go live, Trump speaking at The Bitcoin Conference, and BTC, ETH, and SOL charts looking [they do] (while stocks are weak), it’s hard to imagine a world where we don’t ship next week.”
Reuters recently reported that preliminary approval for ETH ETFs has been granted as the Bitcoin Conference is scheduled to take place from July 25-27.
BTC, ETH, and SOL are trading at $67,333, $3,528, and $174 at the time of writing, respectively.
The venture capitalist too provides an update on his prediction that the total crypto market cap will eventually hit $10 trillion. According to his chart, the path to $10 trillion is currently “23%” complete, as it sits around $2.2 trillion.
Source: Chris BurniskeX
Earlier this month, Burniske he said in an interview with Real Vision CEO Raoul Paul that he has his eye on the Move ecosystem, which was originally built by social media giant Meta and then used to develop layer 1 blockchains Sui (IUE) and Apts (APT).
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Bitcoin’s recovery is going well, and the market is seemingly poised to create a new all-time high in the near term.
Technical analysis
Per NegotiationRage
The daily chart
As the daily chart shows, the price of Bitcoin has been rising since it broke above the 200-day moving average.
The market has also reclaimed the $60K and $65K levels and is moving towards the $68K resistance zone, which could be the last hurdle before creating a new all-time high. With the RSI also indicating that the price has clear bullish momentum, it could be just a matter of time.
The 4-hour chart
Looking at the 4-hour chart, it is evident that the price has been rising rapidly since breaking the downtrend line to the upside. The market also broke the $65K resistance level with momentum, turning it into a support.
While almost everything points to a new record high in the coming weeks, there is one worrying sign. The RSI is showing a clear bearish divergence between recent price highs, which could indicate a correction or even a reversal in the near term.
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