Bitcoin is finally back in the focus again after a crypto winter for the last 2 years.
Year-to-date, Bitcoin is already up by 127%. Barring any big changes in the next 7 weeks, Bitcoin should be one of the top few assets in terms of price performance this year.
In the recent month, the news of a potential Bitcoin spot ETF approval was what fuels the rise in the prices. Since the news broke out in mid October, the Bitcoin price has been up by around 30%.
So why is this a big deal? Don't we already have a Bitcoin Futures ETF (ProShares Bitcoin Strategy ETF) approved two years ago? How is this different from a Bitcoin spot ETF?
The difference is this. A Bitcoin Futures ETF like ProShares Bitcoin Strategy ETF only allows investors to buy into a fund which holds futures contracts, instead of really investing in Bitcoin. Such futures contracts are usually used for hedging or speculative trade instead of direct investment in the asset.
A spot Bitcoin ETF allows buyers to hold Bitcoin by buying into the fund. The concept is pretty similar to buying a stock. Hence, investing in a spot ETF is representative of investing in Bitcoin without the need to deal with the current rather cumbersome process of buying Bitcoin from crypto exchanges. A Bitcoin spot ETF will be a legitimate way of investing in Bitcoin for the wider market. It's also expected that large inflows of funds into such a spot ETF will have a large positive impact on the prices of Bitcoin.
It's expected that the price of Bitcoin could reach anywhere between $50,000 and $73,000 if issuers who have applied to list Bitcoin ETFs put just 1% of their Assets Under Management (AUM)- approximately $155 billion to these ETFs.
If you look back into history, approval of such spot ETFs do indeed have a very positive impact on the asset prices.
We just have to look at gold.
In March 2003, we had the world's first Gold ETF listed in Australia. In October 2004, the SEC approved the first U.S Gold ETF. Throughout this period, the price of gold was surging.
In November 2004, the U.S. Gold ETF (GLD) was officially listed and traded on NYSE. While the price of gold falls for a few months after the event, it continues its surge for a few years until 2012.
Many are expecting a similar pattern will happen to Bitcoin should the spot ETF be approved. In fact, most predict an even more explosive growth in Bitcoin prices. With each passing day, the chances of having a spot Bitcoin ETF approval increases. It's probably a question of when and not if anymore.
I know there are still quite a number of investors who do not believe in the idea of Bitcoin at all. I know everyone is entitled to his or her own opinion, but I strongly urge anyone who does not believe in the concept of Bitcoin to first read the book "The Bitcoin Standard" before you make your decision. I might write a summary and my thoughts about this book in a later post.
Anyway, back to the question which is also the title of this article. Will Bitcoin's Price Hit $100,000 by the End of 2023?
Personally, I have no doubts that Bitcoin's price will hit $100,000 soon. But I think it's a bit too optimistic to believe that Bitcoin's price will hit $100,000 in the next 7 weeks. If I were to make an intelligent guess, I think that Bitcoin's price will perhaps hit $100,000 by Q3 2024. There are a few reasons behind this guess.
Looking at the trend, it is possible that a Bitcoin spot ETF might be approved in Q1 2024. By April 2024, the next halving of Bitcoin will happen. These are already two strong factors which could help to propel Bitcoin's price. If the Federal Reserve were to begin monetary easing policy in Q3 2024, funds will again be poured into risk-on assets and this will inevitably benefit Bitcoin's price. Hence, I do think that there is quite a good chance that Bitcoin's price will hit $100,000 by Q3 2024.
Of course, this is just a guess and I have already made a wrong guess in calling $25,000 the bottom for Bitcoin's price last year.
I recently ran an annual giveaway contest in my Telegram group. Every member in the Telegram group is encouraged to give his/her prediction of the 2023 closing price of Bitcoin. The individual with his/her prediction nearest to the 2023 closing price based on data in Yahoo finance will be mailed a book of his/her choice (or mine if you preferred) from Kinokuniya (max S$50) to his/her house. The deadline for the submission of the price predictions will be 2359 today (12 Nov). So if you are interested to take part, join my Telegram group for the link to participate!