Bernstein says 'next leg of bitcoin bull market is loading' as positive catalysts align

Investors should position themselves for the next leg of the bull market in bitcoin and related equities, according to analysts at research and brokerage firm Bernstein.

The analysts believe the current bull market began in the fourth quarter of 2023, with the rising prospect of spot Bitcoin exchange-traded fund approvals in the U.S., taking the foremost cryptocurrency from $25,000 to $46,000 by the time the funds launched on Jan. 11, 2024.

Strong inflows into the ETFs provided the next catalyst, in the analysts’ view, with their success not priced in and bitcoin climbing to an all-time high of around $74,000 before taking a multi-month pause. Finally, pro-crypto Donald Trump’s win in the November U.S. presidential election led to the next big impulse amid promises to make the U.S the “crypto capital of the world,” create a national bitcoin stockpile and establish a favorable digital assets regulatory framework — seeing bitcoin reach its latest all-time high of around $109,000 on Inauguration Day last month.

“The next leg of the bitcoin bull market is loading up with a confluence of several positive catalysts,” the analysts led by Gautam Chhugani wrote in a note to clients on Monday. “We believe the Crypto Task Force (led by David Sacks) is focused on delivering the National Bitcoin reserve, upon the direction of the President. The Trump administration also announced a sovereign wealth fund (SWF). We believe the SWF would consider key U.S. crypto companies/market leaders, as strategic assets to own.”

Such a bitcoin reserve could be funded by the Federal Reserve or Treasury. However, the Fed would require legislative approval in the form of a new bill, Chhugani said, funded using debt or by selling some of its gold reserves — leading to a quick repricing of the cryptocurrency. Bitcoin seized by the U.S. government, valued at around $20 billion, could also be added to the reserve, potentially sparking a global race among sovereigns, he added.

Other positive catalysts for bitcoin

Among other positive catalysts for the next phase of a bitcoin bull run, the analysts highlighted notable 13F filings with the Securities and Exchange Commission last week, with an Abu Dhabi sovereign wealth fund, Mubadala, disclosing a $437 million investment in spot Bitcoin ETFs and Goldman Sachs, Barclays and Paul Tudor Jones’ investment firm all increasing their position sizes.

Bernstein also noted Strategy’s (formerly MicroStrategy) latest $742 million bitcoin buy, boosting its holdings to 478,740 BTC ($46 million), strong year-to-date spot Bitcoin ETF inflows of close to $5 billion — forecasting $60 billion 2025 — and the SEC’s repeal of SAB 121, enabling crypto custody by banks, as further catalysts.

“The confluence of adoption by banks, institutional investors, corporates and eventually sovereigns is positioning bitcoin as the clear challenger to gold,” the analysts said. “With bitcoin at $2 trillion market value vs. $18 trillion market value of proven gold reserves, we see asymmetric upside for bitcoin.”

Gautam Chhugani maintains long positions in various cryptocurrencies.