Bitcoin volatility has been a constant theme this year led by trade war uncertainty. Cryptocurrency began the year with a profit of 15%, then reversed the course in late January, falling by about 26% by early March.
However, after a volatile March to April month, Bitcoin regained momentum and gathered strongly, posting a 23% gain until the first week of May. The basic drivers of digital currency are expected to remain robust and support the expected stability in the future.
Growing institutional adoption, weakening of greenbacks and forecasts for favorable macroeconomic backgrounds pave the way for a highly optimistic future for digital assets, outweighing the headwinds faced by digital currencies.
The growing interest from institutional investors is sending positive signals to the market, reflecting the trust of the world’s largest institutions in digital currencies. Over the past two weeks, Bitcoin Spot ETF has recorded net inflows of over $4.2 billion, with institutional investors rapidly increasing their crypto exposure, according to the Economic Times.
According to Standard Chartered analyst Geoff Kendrick, in mid-May, investors could also be looking for 13FS submitted to the SEC by the US ETF, as cited in Yahoo Finance. Kendrick expects these disclosures to reveal an increase in purchasing activity from institutional investors.
Kendrick also noted that the inflow of Bitcoin Spot ETFs could highlight rotation, and that there could be ongoing funds shifting from gold ETFs to Bitcoin ETFs. Kendrick says if this trend continues, it suggests that investors may view Bitcoin as a more attractive, safe haven than gold.
The greenback, which focuses on US assets, is gradually declining, driven by the Trump administration’s chaotic tariff policy and investor changes. According to TradingView, the US Dollar Index (DXY) has fallen 2.25% over the past month and 8.13% to date.
Cryptocurrencies, which are alternatives to traditional currencies, tend to come from weak greenbacks. As Greenback loses strength, the finite supply of Bitcoin, coupled with growing institutional adoption, has positioned it as an attractive asset to maintain purchasing power, according to Forbes.
As cited in Forbes, each forecast by some financial institutions could further strengthen Bitcoin’s long-term value proposition if the US dollar fell by 15-20% over the next few years.
The Fed’s advances in interest rate reductions could increase investors’ risk appetite, leading to increased exposure to digital currencies. Furthermore, lower interest rates leave investors with more capital, and in many cases, interest in cryptocurrency is growing.
The Fed is widely expected to not change interest rates at recent meetings, with most economists predicting that interest rates will begin in 2025. Barclays economists will not start with interest rate cuts until July, as quoted in Reuters, allowing time to clarify potential tariffs.
Market sentiment has also shifted accordingly, supporting interest rate cuts in July, followed by two additional cuts later in the year. According to the CME FedWatch tool, the Fed cut interest rates in July, with a 77.6% chance and a 99.5% chance of a September rate reduction.
Combined with aggressive momentum in the stock market, Bitcoin appears poised to break the psychological $100,000 barrier, quickly surpassing its all-time high of $109,000.
As quoted in Yahoo Finance, the lucrative Market Tailwinds could drive Bitcoin to $120,000 in the coming months, according to Geoff Kendrick, analyst at Tostandard Charters. The year-end goal remains at $200,000.
According to Kendrick, a potential strategic real location away from US assets could be Bitcoin’s next upward catalyst, and if the trend comes into play, it could potentially be expected to hit its quarter’s all-time high.
As quoted in Forbes, Joe Burnett, director of Market Research at Unchained, is expected to see a surge in Bitcoin prices up to $200,000 or $250,000 this year as well.
Below, we have mentioned several ETFs that allow investors to increase their portfolio’s exposure to digital currencies.
However, investing in digital currencies requires increased risk appetite and resistance to extreme volatility driven by short-term volatility, causing cryptocurrencies to fluctuate up and down. It is important for investors to maintain development and track development. Despite short-term price fluctuations, the long-term outlook for digital currency remains optimistic.
Investors can consider funds such as iShares Bitcoin Trust IBit, Grayscale Bitcoin Trust GBTC, Fidelity Wise Origin Bitcoin Fund FBTC, ARK 21Share Bitcoin ETF ARKB, and Bitwise Bitcoin ETF Trust BITB.
Regarding annual fee billing, BITB is the cheapest option of the above funds, charging 0.20%, making it more suitable for long-term investments. Investors can also view the Grayscale Bitcoin Mini Trust BTC. BTC will charge an annual fee of 0.15%
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This article was originally published on Zacks Investment Research (zacks.com).
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