Bernstein analysts have reaffirmed its ambitious forecast for Bitcoin, predicting a significant rise in its value following the upcoming halving event, in a note to clients.

The firm’s analysts, Gautam Chhugani and Mahika Sapra, anticipate that Bitcoin will reach $150,000 by the end of 2025, driven by various factors including increased institutional adoption and changes in mining dynamics.

Post-Halving Bullish Trajectory

The halving, a scheduled reduction in the reward for mining Bitcoin, is set to occur around April 19-20, 2024. This event typically diminishes the amount of new Bitcoin entering circulation, which historically has led to substantial price increases. 

While the effect may not occur immediately, it may occur several months later. Despite a recent dip in Bitcoin’s price by about 15% following slower ETF inflows, Bernstein remains optimistic about Bitcoin's potential to achieve new highs, particularly after the market adjusts to the new mining rewards and ETF inflows normalize.

Bernstein analysts argue that while the halving reduces the supply of new bitcoins, its impact on price is primarily driven by subsequent increases in demand rather than the reduced supply alone.

Key Drivers of Demand

According to Bernstein, several key developments are expected to stimulate demand for Bitcoin ETF Inflows: 

• The firm notes that while exchange-traded fund (ETF) inflows have slowed recently, they are likely to pick up post-halving. This resurgence will be crucial in driving the price upwards.

   

• Spot Bitcoin ETFs and Institutional Integration: The integration of spot Bitcoin ETFs with wirehouses and Registered Investment Advisors (RIAs) is projected to continue increasing structural demand for Bitcoin.

Revised Price Prediction

Earlier in March, Bernstein had projected that Bitcoin's price could rise to $90,000 by the end of 2024, an increase from their previous estimate of $80,000. This revision was made in light of strong price appreciation driven by ETF approvals in January, ahead of the halving event.

The analysts are even more optimistic for 2025, as they predict Bitcoin will reach $150,000 by 2025 end. 

Impact of Mining Dynamics

The halving event also raises concerns about the profitability of Bitcoin mining, as the reward for mining is halved. This potential decrease in profitability tends to induce fear among miners, referred to as the "miner fear factor" by Bernstein. 

However, Bernstein recommends investing in companies like Riot Platforms (RIOT) and CleanSpark (CLSK), which are expected to excel due to their effective self-mining strategies and leadership in the mining sector.