BlackRock Recommends Greater Allocation In Its Bitcoin Portfolio, Fundstrat Predict $180,000 BTC Price
Last month, the world’s largest asset manager BlackRock stirred massive interest in the crypto market by filing its spot Bitcoin ETF. Analysts and investors have now queued up to understand what could be the potential implications of BlackRock’s participation into Bitcoin.
Economists have recently delved into the previous BlackRock reports over the optimal portfolio in understanding the risks and rewards. On July 25, Joe Burnett commented on a 2022 BlackRock report regarding the ideal allocation for Bitcoin. Surprisingly, the asset manager suggested an allocation of 84.9% BTC, 9.06% stocks, and 6.04% bonds.
In his comments Burnett said: “If all investors follow BlackRock’s optimal BTC allocation, Bitcoin will be worth more than 5x the total value of all equities, real estate, and bonds.”
He further speculated that if the total global wealth turns around $800 trillion today, Bitcoin (BTC) would be worth $190 million per coin. Back then, BlackRock wrote: “Although Bitcoin has extremely large volatility, the pronounced positive skewness leads to large allocations and dominates in the utility function.”
In another development, investment research firm Fundstrat made a prediction that the Bitcoin price could surge 500% from its current value and touch $180,000 mark ahead of its upcoming halving in April 2024.
Fundstrat suggests that the current daily demand for Bitcoin is around $25 million, matching the daily mining rewards. However, if a spot Bitcoin Exchange-Traded Fund (ETF) is launched, it could lead to a significant change in this equation. The ETF could attract an additional $100 million in daily demand for Bitcoin. This, along with the upcoming halving event in April 2024, could have a substantial impact on the cryptocurrency market, reports Market Insider.
The noted from Fundstrat reads: “[The Bitcoin ETF] 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”.
Besides, the investment firm also commented on the possibility of the Bitcoin ETF approval. According to Fundstrat, if approved, BlackRock's spot Bitcoin ETF could become one of the largest ever launched, possibly surpassing the current record holder, Invesco's QQQ ETF. The QQQ ETF attracted $36 billion in inflows in its first year after its launch in March 1999 and tracks the Nasdaq 100.
Fundstrat also believes that Bitcoin ETFs could eventually outgrow the precious metals ETF market, which currently holds around $230 billion in assets. They project that the Bitcoin ETF category could reach a value of over $300 billion.