Bitcoin, Crypto-Related Stocks Are Ripe for Institutional Adoption: Bernstein
Spot bitcoin ETFs are expected to be approved by major wirehouses and large private bank platforms in the third and fourth quarters, the report said.
Updated Jun 19, 2024, 10:03 a.m. Published Jun 19, 2024, 10:00 a.m.
- Crypto markets are on the cusp of further institutional adoption, the broker said.
- Spot bitcoin ETFs will be approved by major wirehouses and large private bank platforms in the third and fourth quarters, the report said.
- Bernstein predicts that bitcoin will reach a cycle high of $200,000 in 2025, $500,000 by 2029 and $1 million by 2033.
Bitcoin (BTC) and crypto-linked stocks are underrated and ripe for institutional adoption, broker Bernstein said in a research report on Wednesday.
Bernstein notes that crypto bears have argued that the spot bitcoin exchange-traded fund (ETF) trade is over, that most of the early allocations were from retail investors, and that the majority of institutional demand was for the “basis cash and carry trade” and not new net long positions.
While this is true, “we see bitcoin ETFs as on the cusp of approvals at major wirehouses and large private bank platforms in Q3/Q4,” analysts Gautam Chhugani and Maihka Sapra wrote. Spot bitcoin ETFs were approved for the first time in the U.S. in January, dramatically broadening access to the world’s biggest cryptocurrency.
The institutional basis trade appears to be the “Trojan horse for adoption” and these investors are now evaluating net long positions as they become more comfortable with improving ETF liquidity, the authors wrote. The basis trade involves buying the spot bitcoin ETF and selling the bitcoin futures contract at the same time and then waiting for the prices to converge.
Bitcoin ETF inflows are expected to accelerate in the third and fourth quarters, the report said, and the next leg of adoption will be driven by large advisers approving ETFs and allocation headroom from existing portfolios.
The broker expects bitcoin to rise to a cycle high of around $200,000 by 2025, $500,000 by 2029 and $1 million by 2033.
Bernstein has an outperform rating on bitcoin miners Riot Platforms (RIOT) and CleanSpark (CLSK). The broker also has an outperform rating on software company and bitcoin acquirer MicroStrategy (MSTR) and trading platform Robinhood (HOOD).
Read more: U.S.-Listed Bitcoin Miners Reached Record Total Market Cap of $22.8B in June: JPMorgan
Will Canny
Will Canny is an experienced market reporter with a demonstrated history of working in the financial services industry. He's now covering the crypto beat as a finance reporter at CoinDesk. He owns more than $1,000 of SOL.
