Bitcoin (BTC) Could Return More Than 619% by 2028, Bernstein Analysts Say

Spot Bitcoin ETFs have already boosted demand among institutional investors

Bitcoin (CRYPTO: BTC) surged 150% over the past year, outpacing the U.S. stock market. But Bernstein analysts Gautam Chhugani and Mahika Sapra expect the cryptocurrency to move much higher in the next decade.

Their price targets are listed below, along with the implied upside based on Bitcoin's current price of $66,000.

Chhugani and Sapra gave two reasons for their confidence in a recent note to clients. First, Bitcoin demand among institutional investors is trending higher due to the recent approval of spot Bitcoin ETFs. Second, Bitcoin supply is limited to 21 million coins by periodic halving events.

Here's what investors should know about Bitcoin.

Spot Bitcoin ETFs have already boosted demand among institutional investorsThe SEC approved 11 spot Bitcoin ETF applications in January 2024. That was a major development for two reasons.

First, Bitcoin now bears the regulatory seal of approval, which legitimizes the cryptocurrency as an institutional asset. Second, spot Bitcoin ETFs provide direct exposure to Bitcoin without the complexities of cryptocurrency exchanges, and they often cost less.

For instance, the iShares Bitcoin Trust (NASDAQ:IBIT) bears an expense ratio of 0.25%, meaning the annual fee on a $10,000 portfolio would total $25. But Coinbase Global (NASDAQ:COIN) charges up to 0.6% per transaction, meaning a $10,000 trade could cost $60.

Collectively, that value proposition is resonating with the market. In fact, BlackRock's iShares Bitcoin Trust and Fidelity's Wise Origin Bitcoin Trust (NYSEMKT:FBTC) ETF both trades.

Also noteworthy, according to Forms 13F filed with the SEC, over 400 institutional investors bought positions in the iShares Bitcoin Trust in the first quarter, and more than 200 bought positions in the Wise Origin Bitcoin Trust. Included in those numbers are Citadel Advisors, D.E. Shaw, and Millennium Management, the three most profitable hedge funds in history.

In their note to clients, Bernstein analysts Gautam Chhugani and Mahika Sapra explained why spot Bitcoin ETFs may drive greater institutional adoption in the future. "We believe that U.S. regulated ETFs were the watershed moment for crypto that brought in structural demand from traditional pools of capital."

Bitcoin halving events have consistently been followed by pricing appreciationBitcoin is like other assets in that its price is determined by supply and demand. But unlike most assets, demand is the most consequential variable because Bitcoin supply is fixed. Periodic halving events are the mechanism by which the 21-million-coin supply limit is enforced.

To elaborate, Bitcoin mining subsidies — newly minted Bitcoin awarded to miners that successfully validate a transaction block — decrease by 50% each time 210,000 blocks are added to the blockchain. Halving events occur about once every four years, and they are significant because they reduce selling pressure, simply because miners are left with less Bitcoin to sell.

Halving events have consistently preceded significant price appreciation, as shown in the chart below.

Bitcoin Halving

Price At Halving

Price At Next Halving

Return

November 28, 2012

$12

$647

5,291%

July 9, 2016

$647

$8,821

1,263%

May 11, 2020

$8,821

$63,462

619%

Data source: Morgan Stanley, YCharts.

The most recent halving event took place on April 19, 2024, when Bitcoin traded at $63,462. As shown above, history says Bitcoin will be worth more by the next halving event in 2028. The chart also shows that the return has declined with each subsequent halving event, such that the upside this time is less than 619%.

That trend is due to the diminishing impact of halving events on total supply. For instance, the block subsidy was cut from 50 BTC to 25 BTC in 2012, meaning the absolute reduction in newly minted Bitcoin was 25 BTC per block. That halving event impacted supply more profoundly than the next halving event, when the block subsidy was cut from 25 BTC to 12.5 BTC in 2016.

With that in mind, the most recent halving event — which cut the block subsidy from 6.25 BTC to 3.125 BTC — should be the least impactful to date. However, spot Bitcoin ETFs are an unknown variable that could significantly alter Bitcoin's price trajectory over the next four years

News source：https://www.kdj.com/cryptocurrencies-news/articles/bitcoin-btc-return-bernstein-analysts.html

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