Bitcoin price could surge to $280,000 in 3 years on ETF inflows - JMP

JMP Securities analysts are out with a compelling prediction about Bitcoin (BitfinexUSD) prices. The investment firm suggests that Bitcoin price could potentially surge to $280,000 within the next three years, driven by the anticipated Bitcoin ETF inflows.
This bold forecast has, as expected, garnered interest and ignited some debate as to the impact of ETF inflows on the price of Bitcoin.

Bitcoin price soars

Bitcoin has experienced a remarkable surge over the last year or so, with its price climbing steadily through 2023 before surging in late January and throughout February 2024. The long-awaited approval of Bitcoin Spot ETFs by the SEC in January helped its price rise. 
At the time of writing (11:45 am ET Wednesday, March 13, 2024), Bitcoin is trading around the $72,572 mark, up 71.35% for the year-to-date and 199% in the last 12 months. It hit a new all-time high of $73,679 earlier in Wednesday’s session.
This significant rise in Bitcoin's value has captured the attention of investors and financial experts once again, sparking discussions about the potential implications for the cryptocurrency market in the coming years.

What is Bitcoin ETF

A Bitcoin ETF, or Exchange-Traded Fund, is a type of investment fund that tracks the price of Bitcoin and trades on traditional stock exchanges. 
Essentially, a Bitcoin ETF allows investors to gain exposure to Bitcoin without needing to directly hold the cryptocurrency. Instead, they can buy and sell shares of the ETF through their brokerage accounts, just like they would with any other stock.
The creation of Bitcoin ETFs has been a significant development for the cryptocurrency market. It is a new way for traditional investors to participate in Bitcoin's potential gains without the need to own and store the digital asset directly. Additionally, regulatory bodies' approval of Bitcoin ETFs has been seen as a step towards mainstream acceptance.

Bitcoin ETF inflows forecast

JMP Securities analysts estimate $220 billion flows into spot Bitcoin ETFs over the next three years. This is multiples of what has already been experienced.
The firm has been quite bullish on the prospects of a spot Bitcoin ETF and the implications it would have on both the broader crypto market, and while they appreciate that there has already been a step-function in engagement in the industry following the ETF launches, the firm argues that the activity and flows experienced thus far is “likely still the tip of the iceberg.”
“We estimate that after ~$10B in flows to date, two months into launch, flows will actually continue to grow materially from here over the next few years as the ETF approval is just the beginning of a longer process of capital allocation,” said JMP. 
“Our experience is that following the flow of funds is critical to price movements over time, and when barriers to investment are removed, in turn allowing incremental flows into an asset (or asset class), the potential multiplier on price can be tremendous.”
As a result, the investment firm estimates $220 billion of incremental flows will come into the ETF over the next three years, which they believe “could also be quite impactful to Bitcoin's price” given the multiplier on capital. 
“We estimate a current multiplier of ~25x, which on our flow estimate would equate to an incremental $280K per Bitcoin,” declared the firm. 

Coinbase stock target raised as analysts expect robust Bitcoin ETF inflows
JMP Securities analysts raised their price target for Coinbase (NASDAQ:COIN) from $200 to $300, citing expectations of strong inflows into spot Bitcoin exchange-traded funds (ETFs).
“We estimate $220B of flows into spot-Bitcoin ETFs over next three years, multiples of what has already been experienced; Coinbase remains well positioned if we are correct,” analysts wrote in the note.
Analysts maintained a Market Outperform rating on the stock.
JMP analysts first voiced their optimistic view on the impact of a potential spot-Bitcoin ETF on the crypto market and Coinbase's role within it in December 2023.
Contrary to the prevalent belief that such an ETF would negatively affect exchanges like COIN, they anticipated an opposite effect. Notably, JMP believed this view was misguided and overlooked the crypto exchange’s unique position and evolving business model in the broader crypto ecosystem.
Moreover, analysts and their team believe that the current activity and flows into Bitcoin ETFs are likely just “the tip of the iceberg.”
“We estimate that after ~$10B in flows to date, two months into launch, flows will actually continue to grow materially from here over the next few years as the ETF approval is just the beginning of a longer process of capital allocation,” analysts wrote,
In this light, the broker views Coinbase, and a handful of its peers, as “significant beneficiaries of the additional capital flows” expected to enter the space.
With only a few firms possessing the necessary technical expertise and scale to facilitate entry and success for others in the digital asset space, JMP analysts see Coinbase “as currently well-positioned to participate in many areas of growth in an industry we estimate will grow by multiples over the next decade.”


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Total Vol


1Bitcoin
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