Analyst discusses his bullish case for crypto in 2024 and anticipated spot bitcoin ETF approval

Bitcoin (BTC-USD) prices have sured on hopes the Securities and Exchange Commission will approve a spot bitcoin ETF. But, according to Bernstein Global Digital Assets Managing Director and Senior Analyst Gautam Chhugani, there’s one thing that has made this rally different.
Retail traders have been a big driver of the crypto market. As Chhugani points out, crypto-related bankruptcies and the collapse of FTX “directly hurt” investor confidence, primarily retail investor confidence, since institutions weren’t playing a big role. But that has changed. In this cycle, institutions are in the driver seat, according to Chhugani. “Institutions have always been laggards in any crypto… bull market. This time, actually, institutions have led the market,” Chhugani argues, pointing to large firms like BlackRock filing for spot bitcoin ETF applications.
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Investors are eagerly awaiting SEC approval for Bitcoin ETFs those are expected out next week but outside of this event and away from the huge rally we’ve seen in the crypto space over the last several months our next guest thinks the investing world is still not bullish enough on crypto as 2024 gets

Underway Gotham chani is Bernstein’s managing director and Senior analyst in the digital asset space joining us now to discuss um so gotam let’s start with SEC approval Bitcoin ETFs your view on that I guess the questions you get from clients how you’re having folks think about this event for the overall crypto

Space yeah so yeah we do think we’ll get the Bitcoin ETF approval by next week hopefully uh this is obviously a significant event right because uh you’re going to see uh funds flow from the traditional markets to the crypto markets and this has usually been a challenge right given how challenging

The Exchange space has been for crypto we’ve had accidents in the past we’ve got this massive fraud that happened in 2022 with FTX uh so safekeeping in custody and sort of better user experience has always been a challenge with Bitcoin and crypto so I think the

ETF is a good start uh we get to see uh regular people uh be able to safely custody the Bitcoin without worrying about safety uh and and that’s I think that’s quite significant and thinking about you know the role that retail plays in the crypto Market overall what

Have you seen from those investors in the last few months how do you expect those investors to play a role in the market in 2020 before because it felt at least to me and maybe this is you know maybe I’m wrong on this it felt like late 22 early 23 that bid that

Enthusiasm from retail really came out of the crypto market and it feels like it’s come back in a big way just in the last few weeks yeah for sure so I think when you know in a event like FDX happens and obviously you saw many other bankruptcies with Celsius and Voyager uh

That directly hurt uh investor confidence uh particularly retail investor confidence because those were the ones that mostly invested uh obviously institutions didn’t play a that biger role in the last cycle I think what’s changed uh you know what in this cycle versus any other previous cycle institutions have always been

Laggers in any crypto Market uh any crypto bull market this time actually institutions have led the market right so the first news that came in in June was the Black Rock filing of the Bitcoin ETF and that was a big signal that went out to everyone else and obviously

Multiple other ETF applications followed first with Bitcoin and then with eum later in the year so I think those two signals were very strong from an Institutional standpoint and even you know within for us as bste we’ve seen this play out where uh the overall retail sentiment was weak through 2023

But when it came to sort of large institutional Clans we were seeing that interest come back so uh it’s a different Market it’s a different cycle uh I think retail wanted that confidence uh and now that institutions are leading it now retail can come out in full force

And feel confident about it and this time they don’t have to worry about uh you know C and safety which has obviously been one of the biggest challenges of crypto yeah certainly and Gotham when we take into account the runup that we’ve seen in the price of

Bitcoin and a price of a number of these crypto stocks there how much of this has already been priced in and when you take into account the other other drivers the other catalysts that you see here on the horizon for Bitcoin what do you think then that what that upside looks

Like yeah so I think there’s been a bit of runup I think probably about 25% in the last two months uh clearly that’s not you know what we call you know the event being priced in maybe the you know the event of approval is priced in but

What really needs to be priced in here are the flows so we do expect significant flows maybe a bit slow initially and takes a bit while to you know for the ETFs to integrate with the advisers and for it to become part of usual portfolio allocations of wealth

Managers and so on so forth but as the as the year progresses I think we expect closer to about 10 billion dollars plus uh in this year itself kind of flowing into the market I think we’re being a tad conservative uh and then obviously in the following year you know we do

Expect overall about 10% of Bitcoin circulating Supply to be custodi under the edfs and obviously that’s quite significant uh that’s quite a significant number which will mean you know hundreds of billions dollars of flows uh kind of playing out over the next 18 to 24 months K I think a lot of

People are sitting at home listening to at least your forecast they’re very optimistic about what that pricing action could look like then between now and the end of the year and Beyond so what do you think are the top ideas or your top plays for investors at this

Point to really capitalize on some of that optimism that you see coming into the market yeah sure so I think this year the significant event after the ETF is going to be the Haring Haring is a significant event from the point of view of the fact that you know the cell

Pressure uh is going to kind of be cut into half starting April 2024 you know the miners earn Bitcoin and then they sell it in the market and that’s that’s obviously known that this is going to happen in April but when you combine that with the demand C this right the

Demand that’s coming from corporate treasuries obviously with something like micro strategy but it could be even other uh corporate treasuries given the change in the FB rules around how you account for Bitcoin on the balance sheet uh and then as the ETF builds up you know that’s the obviously another

Significant demand catalyst so when you combine that Supply from har with the demand that’s where our bullish view comes from and that obviously leads to uh you know our forecast there uh in terms of ideas uh what we like are the Bitcoin miners uh so we we covered three

Names uh Riot clean spark and Marathon we have an output form on those two which is Riot and clean spark uh and there obviously it’s interesting because we see miners as a as a high beta way to kind of play the Bitcoin cycle given as the price improves their revenue

Improves uh that leads to operating leverage and then obviously later into the cycle you start to see their price multiples expand as well so we do think that if Bitcoin uh you know what we are seeing goes to 150,000 in the cycle High uh we think miners will do more than that

For join all right Gotham jagani thanks so much for joining us here this morning Bernstein’s uh analyst there thanks so much great thank you