© Reuters
Analysts at JMP Securities present a compelling price prediction (). The investment firm suggests that the price of Bitcoin could potentially rise to $280,000 in the next three years, driven by early inflows into Bitcoin ETFs.
This bold forecast, as expected, has sparked interest and ignited some debate about the impact of ETF inflows on the price of Bitcoin.
Bitcoin price soars
Bitcoin has seen a notable surge over the past year, with its price rising steadily through 2023 before surging in late January and throughout February 2024. The Long-awaited SEC Approval of Bitcoin Spot ETFs in January it helped its price rise.
At the time of writing (11:45 a.m. ET on Wednesday, March 13, 2024), Bitcoin is trading around $72,572, up 71.35% year-to-date and 199% over the last 12 months. It hit a new all-time high of $73,679 early in the session on Wednesday.
This significant increase in the value of Bitcoin has once again captured the attention of investors and financial experts, sparking debates about the possible implications for the cryptocurrency market in the coming years.
What is Bitcoin ETF?
A Bitcoin ETF, or exchange-traded fund, is a type of investment fund that tracks the price of Bitcoin and trades on traditional stock exchanges.
Basically, a Bitcoin ETF allows investors to gain exposure to Bitcoin without needing to directly own the cryptocurrency. Instead, they can buy and sell shares of the ETF through their brokerage accounts, just as they would any other stock.
The creation of Bitcoin ETFs has been a significant development for the cryptocurrency market. It is a new way for traditional investors to participate in the potential profits of Bitcoin without the need to own and store the digital asset directly. Furthermore, the approval of Bitcoin ETFs by regulatory bodies has been seen as a step towards widespread acceptance.
Bitcoin ETF Inflows Forecast
Analysts at JMP Securities estimate that $220 billion will flow into spot Bitcoin ETFs over the next three years. This is a multiple of what has already been experienced.
The company has been quite optimistic about the prospects of a spot Bitcoin ETF and the implications it would have on both the broader crypto market, and while they appreciate that there has already been a phased-in feature in participation in the industry following the launches of the ETF, The company maintains that the activity and flows experienced so far “probably remain the tip of the iceberg.”
“We estimate that after ~$10 billion in flows to date, two months after launch, flows will actually continue to grow materially from now on for years to come, as the approval of the ETF is just the beginning of a longer capital allocation process,” JMP said.
“Our experience is that tracking the flow of funds is fundamental to price movements over time, and when barriers to investment are removed, in turn allowing incremental flows into an asset (or asset class), the potential price multiplier can be enormous.”
As a result, the investment firm estimates that $220 billion of incremental flows will enter the ETF over the next three years, which they believe “could also have a large impact on the price of Bitcoin” given the capital multiplier.
“We estimate a current multiplier of ~25x, which based on our flow estimate would equate to an increase of $280,000 per Bitcoin,” the company stated.
