Bitcoin and other cryptocurrencies saw a decline in value on Wednesday, retracing some of the gains they had made since the beginning of the year. Despite this, several analysts still believe there are factors that could contribute to the continued strength of the crypto market.
Over the past 24 hours, the price of Bitcoin has fallen by 0.6% to $45,372. Just a day before, the leading cryptocurrency surpassed the $45,000 mark for the first time in over a year.
One of the key drivers for Bitcoin’s performance is the potential approval of exchange-traded funds (ETFs) tied to its spot price. Launches of these ETFs are anticipated as early as next week, and multiple issuers have recently disclosed their planned fees for these investment vehicles.
Carsten Menke, Head of Next Generation Research at Julius Baer, expressed confidence in Bitcoin’s current fundamental backdrop. In a research note, he highlighted factors such as widespread accumulation by long-term investors, reduced supply growth from Bitcoin miners, and the high probability of eventually approving physically-backed US ETFs for the cryptocurrency.
AllianceBernstein analysts also weighed in on Bitcoin’s potential trajectory. According to their research note, the digital asset could potentially reach around $80,000 by the end of the year. They cited factors such as the anticipated approval of ETFs, an upcoming halving event in April, and increasing demand from companies as contributing to this forecast.
In addition to Bitcoin’s dip, Ethereum, the second largest cryptocurrency, experienced a decline of 1.4% to reach $2,380. Smaller cryptocurrencies also faced losses, with Solana dropping by 6.1% and Cardano falling by 2.8%. Dogecoin followed suit with a 2% decrease.
Overall, while the crypto market experienced a setback, analysts remain optimistic about its future prospects. The potential approval of ETFs, upcoming halving event, and growing corporate interest all contribute to a positive outlook for digital currencies.