Two months after 2024, bitcoin (btc -1.12%) continues to hold steady above $50,000, its highest level since December 2021. And, based on its recent approval of new Bitcoin spot ETFs in January, government regulators appear to be more favorably disposed to cryptocurrencies than in any other time in the last two years.
With that in mind, here are three predictions for how the rest of the year could play out.
Wall Street expands into new ETF products
The story of the year so far has been the SEC's approval of nearly a dozen new detect Bitcoin ETF products for investors. Building on that move, Bitcoin finally surpassed the $50,000 mark, and many analysts believe that bitcoin It is now on the verge of becoming mainstream among retail and institutional investors.
So doesn't it make sense for Wall Street to follow the success of its Bitcoin ETF spot offerings with those of other cryptocurrencies as well? The only cryptocurrency everyone is talking about now is Ethereum (ETH -0.85%), which could get SEC approval for new Ethereum spot ETFs as early as summer. If that's the case, then Ethereum could skyrocket in value, just like Bitcoin finally did after the official launch of its spot ETFs.
And there are already rumors that Wall Street could continue its vanilla spot Bitcoin ETF offerings with slightly spicier versions. These include inverse ETFs (which would move in the opposite direction that Bitcoin moves) and leveraged ETFs, which would allow investors to place highly leveraged bets on Bitcoin's directional movements. Needless to say, most investors should probably stick to basic offerings.
Investors allocate more than 2% of their portfolios to cryptocurrencies
Looking ahead to 2024, cryptocurrencies were largely perceived as a risky, speculative and even potentially toxic investment. It was certainly something that didn't belong in retirement accounts. Most wealth managers, portfolio strategists, and investment advisors were hesitant to suggest allocating more than 1% of a diversified portfolio to cryptocurrencies.
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But all that has apparently changed with the arrival of new Bitcoin spot ETFs. Suddenly, it seems like everyone is open to the idea of โโallocating more of their portfolios to cryptocurrencies. Fidelity Investments, for example, now appears to suggest that a 1% allocation is "conservative," while a "balanced" approach would require a 2.5% allocation. An "aggressive" allocation would be 3% or more.
And in late January, Ark Invest suggested that investors may want to allocate up to 19.4% of their portfolios to cryptocurrencies for optimal risk-adjusted returns. Presumably, almost all of that exposure would come from Bitcoin, now that it's so easy to add a spot Bitcoin ETF (like Ark Invest's new offering) to a portfolio mix.
Bitcoin ends the year above $100,000
All this buying pressure on Bitcoin will almost certainly send the world's most popular cryptocurrency to ever greater heights. But at what height? Right now, $100,000 appears to be Bitcoin's target price on everyone's radar. This is mainly based on continued investor fund inflows into Bitcoin ETFs, an improving macroeconomic situation, and a more stable regulatory outlook for cryptocurrencies.
But Bitcoin could go much higher. The highly anticipated Bitcoin halving event coming up in April could be the catalyst for Bitcoin to double or even triple in value. This is because three previous halving events (in 2012, 2016, and 2020) have skyrocketed Bitcoin to new all-time highs. Hedge fund Pantera Capital, for example, predicted last year that Bitcoin could reach $148,000 by July 2025.
Warnings for cryptocurrency investors
Right now, Bitcoin seems like an obvious investment, and the new Bitcoin spot ETFs seem to be a notable hit for Wall Street. All of that seems to suggest that 2024 will be the year cryptocurrencies finally go mainstream. At best, it could also be the year Bitcoin sets a new all-time high again.
But remember: nothing is certain in the world of cryptocurrencies. Trying to predict the cryptocurrency market can sometimes seem silly. Volatility, regulatory uncertainty, and ever-changing narratives are the norm rather than the exception.
So before you rush out to buy a new spot Bitcoin ETF, or decide to increase your portfolio's cryptocurrency allocation, make sure you do your homework.
