According to Fundstrat analyst Tom Lee, Bitcoin (BTC) could potentially surge to $150,000 by the year’s end, marking a threefold increase from its current value.
Lee’s optimistic forecast rests on two fundamental factors: increasing demand driven by the introduction of Bitcoin ETFs and dwindling supply attributed to the forthcoming Bitcoin halving event.
Tom Lee’s Bitcoin Forecast
“In an interview with CNBC’s Squawk Box on Wednesday, Lee emphasized, ‘You’ve got demand improving with the ETF, you’ve got supply shrinking with the halving, and if monetary policy eases – which we expect – that’s supportive of risk assets.'”
Bitcoin has historically exhibited a correlation with “risk assets” such as tech stocks. Its value tends to rise when interest rates decline (e.g., in 2020) and decrease when interest rates increase (e.g., in 2022). Traders, according to CME Fedwatch, currently assign a 53% probability to the Federal Reserve initiating interest rate cuts by June.
These liquidity cycles often coincide with Bitcoin’s “halving,” a quadrennial event that halves the rate at which new coins are introduced into circulation. This year’s Bitcoin halving will reduce the daily issuance of Bitcoin by 450 BTC, equivalent to $23 million at today’s price.
However, many analysts now contend that the recently approved Bitcoin spot ETFs will serve as the primary catalyst for Bitcoin’s next bullish cycle. Funds launched by industry giants like BlackRock and Fidelity, among others, have collectively attracted over $5 billion since their launch on January 11. On Tuesday alone, these funds garnered an additional $136 million, according to data from BitMEX Research.
The Beauty Of Bitcoin
The significant influx of funds has propelled Bitcoin’s price above $50,000 for the first time in two years, defying JPMorgan’s expectations of a more protracted “sell the news” scenario following ETF approvals.
Lee remarked in the interview, “Bitcoin’s holding up, and that’s another reason I don’t think a drawdown is gonna start that soon. It is sound money, it’s proving to be useful. It’s been a great store of value, it’s been a good risk asset. It’s also incredibly secure… there hasn’t been a single fraudulent entry on the blockchain since inception. I don’t think any bank can say that of their PNL and their accounting.”
Previously, Lee had forecasted that BTC could potentially reach $180,000 by the day of the Bitcoin halving, based on an estimated daily demand for Bitcoin ETFs reaching $125 million per day. As of February 21, the ETFs have averaged $185 million of daily demand, surpassing initial projections.
