A spot bitcoin exchange traded fund in the U.S. is far from a guaranteed proposition. However, there’s no denying the largest digital currency will see another halving in April 2024. Either or both events could be potential upside catalysts.
That’s the sentiment of research firm Fundstrat. In a note out earlier this week, Fundstrat forecast that bitcoin could surge to $180,000, roughly six times current prices, ahead of the April 2024 halving. Price appreciation anywhere close to that would likely stir significant upside for shares of bitcoin miners, including those residing on the roster of the Invesco Alerian Galaxy Crypto Economy ETF (SATO ).
Fundstrat also echoed now-familiar sentiment that should the Securities and Exchange Commission (SEC) approve a spot bitcoin ETF, the ensuing reaction would be overtly bullish for bitcoin prices. That could be a positive for SATO’s roster, which is highly correlated to bitcoin price action.
“This [bitcoin ETF launch] would bring daily demand to $125 million, while daily supply is only $25 million. The implied equilibrium price would need to rise so daily supply matches daily demand. Equilibrium analysis suggests that a clearing price is $140,000 to $180,000, before the April 2024 halvening,” according to Fundstrat.
Halving Alone Could Be Bullish for SATO
While the prospects for a U.S.-listed spot bitcoin ETF very much remain up in the air, the halving alone could be a spark for the cryptocurrency and SATO member firms. While halvings cut rewards given to miners, the events aim to keep a lid on supply, which is bullish for bitcoin pricing.
Should the multiplier effect following the halving be in the range of 4x to 5x, that could provide considerable ballast to bitcoin prices.
“This means that $1 of demand can result in a $4 to $5 increase in market cap,” Sean Farrell, Fundstrat’s head of digital asset strategy, noted.
He put the odds of spot bitcoin ETF approval at 75%, noting that if BlackRock brings the first such fund to market, it’s likely to be one of the biggest ETF launches in industry. Looking further out, Farrell estimated that the spot bitcoin ETF category could eventually eclipse the precious metals ETF space, which currently has approximately $230 billion in combined assets under management.
A spot bitcoin ETF or ETFs would stoke demand for bitcoin because issuers would need to purchase the digital currency, in turn driving prices higher. That could benefit SATO.
VettaFi LLC (“VettaFi”) is the index provider for SATO, for which it receives an index licensing fee. However, SATO is not issued, sponsored, endorsed or sold by VettaFi, and VettaFi has no obligation or liability in connection with the issuance, administration, marketing or trading of SATO.
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