While the price of bitcoin has pulled back a bit after nearing the $100,000 threshold late last week, the recent bullish sentiment is unmistakable and likely linked to the reelection of Donald Trump.
“The crypto community is extraordinarily enthused by Donald Trump’s election,” said Ric Edelman , founder of the Digital Asset Council of Financial Professionals and a member of the etf.com advisory board.
“Everyone is wondering who the big winner is from the election; it’s bitcoin,” Edelman added, citing the 400% spike in the price of the cryptocurrency over the period of less than three weeks following the Nov. 5 election.
Bryan Armour, Director of Passive Strategies Research at Morningstar, citing the combined $100 billion mark reached last week for the universe of spot bitcoin ETFs, agreed that momentum was on the side of crypto.
“I suspect the growth of spot bitcoin ETFs stemmed from two main factors: broad bitcoin adoption and a superior product,” he said. “The ETFs allowed new investors to buy bitcoin for the first time, including those unable to setup a wallet and buy bitcoin on a cryptocurrency exchange.”
Investors Remain Bullish on Bitcoin's Future
However, Armour added, “The latest asset boost came from a more positive outlook for the future of bitcoin after Trump’s election win, which boosted performance and brought over $5 billion of inflows,”
Morningstar data show $1.5 billion worth of net flows into bitcoin ETFs during the week leading up to the election, which compares to $4.4 billion worth of net flows during the week following the election.
According to etf.com’s ETF Pulse tool, the $18.4 billion Fidelity Wise Origin Bitcoin Fund (FBTC) has taken in more than $1.2 billion over the past 30 days, which compares to the $160 million for the Bitwise Bitcoin ETF (BITB) as the ETF with the second-best flows during the period.
Since the debut of the first spot bitcoin ETFs in early January, FBTC has seen more than $11.5 billion worth of net flows, followed by the ARK 21Shares Bitcoin ETF (ARKB) with nearly $2.8 billion worth of inflows.
Edelman said the post-election appeal of crypto, which is fueled by the pro-crypto message Trump presented during the campaign, is just the start of the new momentum for digital currency investing.
“So far, most of the money in Bitcoin ETFs has been from retail and some institutional investors, which is why it represents an array of untapped potential,” he said. “We know from our research that less than 15% of financial advisors are currently recommending crypto to their clients, but over half of advisors say they will start recommending crypto within the next year.”
Considering the roughly $9 trillion worth of assets controlled by financial advisors, Edelman said that even a small 2% or 3% allocation to crypto will drive money into the ETFs.
In terms of the $100,000 threshold for the price of Bitcoin, Edelman believes that level will be reached this year, and he expects the price to reach $150,000 by the end of next year, and $420,000 by the end of the decade.
“The $100,000 mark is a big psychological number and there will be some profit taking when that happens,” he said. “Remember, Bitcoin was at $3,000 in 2018, and it was at $15,000 in 2022. People who have been holding it for many years have an astonishing amount of profits.”
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