2 months left until 2024. Bitcoin (BTC -1.64%) And with the recent approval of a new Spot Bitcoin ETF in January, government regulators appear to be taking a more positive stance toward cryptocurrencies than at any time in the past two years.
With that in mind, here are three predictions for how the rest of the year will play out.
Wall Street expands new ETF products
The story so far this year is that the SEC has approved nearly a dozen new spot Bitcoin ETF products for investors. Based on this move, Bitcoin eventually broke through the $50,000 mark and many analysts believe that Bitcoin is becoming mainstream for both retail and institutional investors.
So, wouldn’t it make sense for Wall Street to follow the success of spot Bitcoin ETF products and sell products for other cryptocurrencies as well?Here are the cryptocurrencies everyone is talking about right now Ethereum (Ethereum -3.18%), could receive SEC approval for a new Spot Ethereum ETF by early summer. If that happens, Ethereum's value could skyrocket, similar to what Bitcoin eventually did after the spot ETF was officially launched.
And there are already rumors that Wall Street may follow up its vanilla spot Bitcoin ETF offering with a slightly spicier version. These include inverse ETFs (moves in the opposite direction of Bitcoin's movement) and leveraged ETFs, which allow investors to place highly leveraged bets on Bitcoin's directional movements. can. Needless to say, most investors should probably stick with vanilla products.
Investors allocate more than 2% of their portfolio to cryptocurrencies
Heading into 2024, cryptocurrencies were widely perceived to be risky, speculative, and even potentially harmful investments. It certainly didn't belong in a retirement account. Most wealth managers, portfolio strategists, and investment advisors would not dare suggest allocating more than 1% of their diversified portfolio to cryptocurrencies.
Image source: Getty Images.
But all that seems to have changed with the arrival of the new Spot Bitcoin ETF. Suddenly, it seems like everyone is open to the idea of allocating more of their portfolio to cryptocurrencies. Fidelity Investments, for example, now appears to suggest that a 1% allocation is “conservative” and that a “balanced” approach requires 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 19.4% of their portfolio to cryptocurrencies for optimal risk-adjusted returns. Presumably, nearly all of that exposure will come from Bitcoin, since it has become so easy to add spot Bitcoin ETFs (like Ark Invest's new offering) to portfolio mixes.
Bitcoin ends year-end above $100,000
This buying pressure on Bitcoin is almost certain to push the world's most popular cryptocurrency to even greater heights. But how high? Currently, the price target for Bitcoin that everyone is paying attention to seems to be $100,000. This is primarily based on continued investor capital inflows into Bitcoin ETFs, improving macroeconomic conditions, and a stabilizing regulatory outlook for cryptocurrencies.
However, Bitcoin could rise further. The long-awaited Bitcoin halving event in April could be the catalyst for Bitcoin to double or even triple in value. That's because the last three halving events (2012, 2016, and 2020) have seen Bitcoin reach new all-time highs. Hedge fund Pantera Capital, for example, predicted last year that Bitcoin could reach $148,000 by July 2025.
Note to virtual currency investors
At the moment, Bitcoin seems like an easy investment, and the new Spot Bitcoin ETF appears to be a spectacular success for Wall Street. All of this seems to suggest that 2024 will be the year that cryptocurrencies finally go mainstream. In the best-case scenario, this could be the year that Bitcoin hits another all-time high.
But remember: Nothing is certain in the world of cryptocurrencies. Trying to predict the cryptocurrency market can sometimes seem like a fool's errand. 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 crypto allocation to your portfolio, be sure to do your homework.
