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Is a $500K Bitcoin Rally Possible? Cryptocurrency ETFs to Consider
Since getting spot ETF approval in early January, Bitcoin has been a bit volatile, a trend that may worry some investors. The cryptocurrency surged 70% after approval, posting dramatic gains initially but then losing momentum in mid-March, falling 14% since then.
However, despite the recent volatility, the outlook for Bitcoin remains encouraging in both the short and long term.
Encouraging signals from historical models
According to Motley Fool, the digital asset is mirroring a four-year historical pattern of initially experiencing a bearish trend, followed by an uptrend in the final year. After experiencing a bear market, followed by a recovery in the second year, and continued progress in the third, the cryptocurrency goes through a halving process, after which it reaches a cyclical peak.
If we follow the pattern, Bitcoin has been in a bear market in 2022, which currently puts us in year three with the halving taking place in April. While past performance is no guarantee of future results, we can speculate and use Bitcoin’s historical performance to gain insight into what 2025, year four, might hold.
Using Past Patterns to Predict Bitcoin Price
In the third year, when the halving occurs, Bitcoin increases by an average of 125%, according to Motley Fool, which leads the digital asset to close 2024 at $100,000, up from its early 2024 price of $44,000.
According to past trends, the digital asset increases dramatically by 400% on average in the year following a halving. If the trend repeats and Bitcoin closes this year in line with historical averages, its price could potentially reach around $500,000 by 2025.
Favorable changes in the supply-demand dynamics of digital currency increase the likelihood that price projections will come true.
Avalanche of influx
According to Coindesk, July has historically been a bullish month for the digital asset, with ETFs seeing about $130 million in inflows on the first day of July. Over the past decade, Bitcoin has averaged a gain of more than 11% in July, with seven out of 10 months showing positive returns, according to the data.
With the cryptocurrency’s supply having shrunk by 50% since its halving in April, we could see increased inflows into spot Bitcoin ETFs in the coming months.
Fed Rate Cut to Raise Prices
If the Fed cuts rates in late 2024, investors may consider Bitcoin as an alternative to the depreciation of the dollar, which moves inversely to the Fed’s interest rate adjustments. The increasing likelihood of the Fed cutting interest rates later this year, combined with de-dollarization, tends to create opportunities in digital currencies.
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Furthermore, a possible rate cut by the Fed would increase risk appetite, which, in turn, would help Bitcoin prices.
ETFs to Consider
Below, we highlight some ETFs that allow investors to increase their portfolio exposure to Bitcoin and benefit from its long-term uptrend.
IShares Bitcoin Trust Registered IBIT has gained 12.56% in the last month and 8.67% in the last three months.
Bitcoin Trust in Grayscale GBTC has gained 14.03% in the last month and 8.41% in the last three months.
Bitcoin Fidelity Wise Origin Fund FBTC has gained 12.98% in the last month and 8.64% in the last three months.
Bitcoin ARK ETF 21Shares ARKB has gained 12.55% in the last month and 8.67% in the last three months.
Bitwise Bitcoin ETF Trust BITB has gained 12.56% in the last month and 8.70% in the last three months.
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Grayscale Bitcoin Trust ETF (GBTC): ETF Research Reports
iShares Bitcoin Trust (IBIT): ETF Research Reports
Fidelity Wise Origin Bitcoin Fund (FBTC): ETF Research Reports
ARK 21Shares Bitcoin ETF (ARKB): ETF Research Reports
Bitwise Bitcoin ETF (BITB): ETF Research Reports