Unprecedented Bitcoin Fundamentals: Bernstein Analysis

• Bitcoin's Future as a Global Macropolitical Asset
• Extraordinary Churn Rates in Bitcoin's History
• Bitcoin Halving: A Potential Catalyst
• Impact of New FASB Guidelines
• Approval of U.S-Listed Spot Bitcoin ETF
• The Growing Prominence of Bitcoin as a Debasement Hedge
• Introducing Crypto to a Wider Investor Base

Bitcoin's Future as a Global Macropolitical Asset

According to a research report by Bernstein, Bitcoin$42,260 -0.64% (BTC) is projected to become a significant global macropolitical asset, with a market cap surpassing $3 trillion and quadrupling by mid-2025. Bernstein highlights the robustness of Bitcoin's fundamentals, with 70% of its outstanding supply remaining untraded in the past year.

Extraordinary Churn Rates in Bitcoin's History

Analysts, including Gautam Chhugani, pointed out this is an unprecedented event in Bitcoin's history. The churn rates are extraordinarily high for a financial asset, especially one known for its supply squeeze-induced exponential moves.

Bitcoin Halving: A Potential Catalyst

A potential positive development would be the anticipated bitcoin halving, likely to occur in April or May of the following year. Bernstein predicts this halving will decrease monthly selling pressure from miners to less than $500 million from the current $1 billion, based on Bitcoin's current price of $37,000 per BTC.

Impact of New FASB Guidelines

The Financial Accounting Standards Board (FASB) has introduced new guidelines that may lead to more favorable accounting treatments. These new guidelines would allow companies to document mark-to-market gains on Bitcoin inventory. This could have a favorable impact on corporate preference for holding Bitcoin as a treasury asset and could create new demand from corporate entities.

Approval of U.S-Listed Spot Bitcoin ETF

Another factor that could influence Bitcoin's rise is the approval of a U.S.-listed spot Bitcoin exchange-traded-fund (ETF). The availability of this fund would facilitate access to Bitcoin for companies and retail entities. The report states, The U.S. Bitcoin ETF is on track for approval in early 2024 as the Securities and Exchange Commission (SEC) continues to process applications from leading asset managers.

The Growing Prominence of Bitcoin as a Debasement Hedge

The report suggests that Bitcoin's role as a debasement hedge could increase in importance against the backdrop of debt monetization or a severe economic slowdown in early 2024. The delayed effects of rates overcorrecting for inflation could also contribute to this prominence.

Introducing Crypto to a Wider Investor Base

The report also foresees Bitcoin Spot ETFs playing a crucial role in bringing cryptocurrency to a broader investor base.

Edited by Jonathan Stoker