Since reaching an all-time high of more than $126,000 last October, Bitcoin(CRYPTO: BTC) has struggled, and now trades at about $66,600 (as of March 29). The big question is when will this unwind stop?
One Wall Street analyst thinks the world’s largest cryptocurrency has now bottomed and will soon begin to rise. Bernstein analyst Gautam Chhugani thinks the pain is largely over and that the token can more than double between now and the end of the year.
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After Donald Trump’s presidential election win in late 2024, Bitcoin surged, and it looked like there was no stopping the token. Trump campaigned on creating a friendlier regulatory regime and making the U.S. the crypto capital of the world.
Since winning the election, Trump has largely made good on his promise. Congress has passed several key pieces of crypto legislation that should clear up several regulatory gray areas. The administration has also created a U.S. Strategic Bitcoin Reserve and implemented rules that make it easier for institutions and retirement accounts to purchase the token.
Investors have become more concerned about interest rates remaining elevated, and Bitcoin and crypto seem to have lost their appeal, perhaps overshadowed by new technologies such as artificial intelligence and quantum computing. The war in the Middle East has been the latest challenge for the crypto industry. All of this has led to outflows from Bitcoin spot exchange-traded funds (ETFs) and to some of Bitcoin’s largest holders, known as whales, selling to lock in gains.
Still, a team of analysts at Bernstein led by Chhugani believes Bitcoin has bottomed and reiterated a $150,000 price target by the end of the year, implying more than 100% upside. They view the recent sell-off as a temporary reset, pointing out they haven’t observed systemic stress as in past crypto bear markets.
Chhugani also noted that Bitcoin has actually outperformed gold since the Iran war began.
The bull case for Bitcoin is that its finite maximum supply of 21 million coins make it a form of digital gold. Gold can hedge inflation and tends to see inflows during geopolitical conflicts, although it has struggled this time around. Part of this can be attributed to a stronger U.S. dollar, with which gold has historically had an inverse relationship.
Coming into the conflict, gold had surged, so it’s possible investors sold to lock in gains and as they sought liquidity.
Chhugani and his team remain bullish on the Bitcoin treasury company Strategy, which holds 3.6% of all the coins in circulation . Chhugani sees Strategy as a high-beta substitute for Bitcoin with a balance sheet that is “resilient, liquid and pressure-tested.”
Finally, the Bernstein team noted that institutional interest in Bitcoin remains a big part of the equation, and they’ve seen higher ETF flows more recently, as well as more traditional banks offering crypto services.
I would caution investors against reading too much into near-term price targets for Bitcoin and other cryptocurrencies. Even Bitcoin, the largest, most established token, remains too volatile for even the smartest on Wall Street to make price predictions.
That said, investors should also keep in mind that Bitcoin has endured many significant sell-offs in its short life, some of as much as 90%. Every time, the token has recovered and reached new highs.
Although it is still unclear whether Bitcoin is truly a form of digital gold, it is possible, and the token has demonstrated some characteristics that would support this thesis.
Ultimately, I think Bitcoin could prove to be a unique portfolio diversifier. It also still has a good chance of delivering strong long-term returns, so investors can allocate at least some capital to it, although I wouldn’t necessarily make it one of the largest positions in your portfolio.
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