Standard Chartered’s head of FX research, Geoff Kendrick, has made a bold prediction regarding the future of Bitcoin. In a recent note released on Monday, Kendrick anticipates that approving a Bitcoin spot exchange-traded Fund (ETF) could propel the leading cryptocurrency to unprecedented heights, potentially reaching $200,000 by the end of 2025. This projection comes as the financial world eagerly anticipates the Securities and Exchange Commission’s decision to approve the first Bitcoin spot ETF.

The Impact of a Bitcoin Spot ETF

The anticipation surrounding the approval of a Bitcoin spot ETF is high, with expectations that it could significantly influence the price of Bitcoin. According to Kendrick’s analysis, these ETFs’ approval and subsequent inflows could surge BTC’s value by over 300% from its current level of around $45,000. He bases this prediction on the assumption that spot US ETFs will attract inflows between $437,000 and $100,000 by the end of 2024, coupled with an estimated minting of 1.32 million new Bitcoins. The potential inflows for this year alone are projected to be between $50 billion and $100 billion.

Kendrick’s forecast also considers the impact of the upcoming halving cycle and the tendency of miners to hoard tokens, both of which could lead to a decline in BTC’s available supply. This reduction in supply and increased demand driven by ETFs could set the stage for significant price increases, potentially reaching $100,000 before the end of 2024.

Historical Context and Supply Dynamics

In his analysis, Kendrick draws a parallel between the potential impact of a Bitcoin spot ETF and the historical impact of the gold spot exchange-traded product on the price of gold. Following the launch of the SPDR Gold Shares in 2004, the value of gold experienced a significant increase, more than quadrupling over seven years. Kendrick uses this historical precedent to bolster his prediction for Bitcoin, expecting a similar if not more accelerated, price increase for the cryptocurrency.

The supply dynamics of Bitcoin also play a crucial role in Kendrick’s forecast. He notes that the percentage of Bitcoin’s total supply in circulation is at an all-time low, indicating that the supply is more price-inelastic than ever. This means that any increase in demand is likely to have a more pronounced impact on Bitcoin’s price. The limited and diminishing supply of Bitcoin, a fundamental aspect of its design, adds to the potential for significant price increases in the face of growing demand. 

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Filed under: News - @ January 1, 1970 12:00 am