Bitcoin is at a critical point of significant entry from traditional finance. If the U.S. strategic reserve plan comes to fruition, Bitcoin could potentially rise 2-5 times, breaking through a range of $150,000 to $500,000. Provide market analysis and relevant theoretical support without an AI tone.
Market analysis and theoretical support: The logic behind Bitcoin's potential 2-5 times increase
1. The entry threshold of traditional financial institutions
Current situation and data: Since 2023, institutions like BlackRock and Fidelity have submitted applications for Bitcoin spot ETFs, marking traditional finance's compliance recognition of Bitcoin. By 2024, the management scale of U.S. Bitcoin futures ETFs has exceeded $10 billion, and if a spot ETF is approved, it will directly open the channel for traditional capital to enter.
Theoretical support: According to the **'Demand Shock Theory'**, when new demand for an asset (such as institutional allocation) far exceeds its liquidity supply (Bitcoin's annual circulation is only about 4%), prices will rise non-linearly. For reference, after the launch of the gold ETF (GLD), gold prices increased threefold within five years, while Bitcoin's scarcity is even stronger (with a cap of 21 million coins).
2. Potential impacts of the U.S. strategic reserve plan
Historical reference: After the U.S. included oil in its strategic reserves in the 1970s, oil prices skyrocketed from $3 per barrel to $40 (a 13-fold increase). If Bitcoin is treated as a 'digital strategic asset' as part of reserves (like 1-5%), the potential demand is estimated at about 500,000 to 1 million coins (accounting for 3-6% of the circulating supply).
Supply-demand model: Bitcoin's stock-to-flow model (S2F) indicates that its scarcity will approach that of gold (S2F=62) after the 2024 halving. If institutional demand combines with the halving effect, a price breakout above $150,000 (currently three times) aligns with historical cyclical patterns (the price increased more than five times after the halvings in 2017 and 2021).
3. Liquidity premium and market structure changes
Order book analysis: Current exchange depth shows a sharp reduction in sell order liquidity above $100,000. If significant buying occurs (e.g., an ETF daily net inflow of $100 million), the market may quickly rise due to a thin liquidity trap.
Options market signal: The open interest ratio of call options with a strike price of $100,000 expiring at the end of 2024 exceeds 30%, reflecting the market's bet on extreme price increases. Deribit data indicates that market makers need to dynamically hedge (Delta Hedging), which may accelerate the upward trend.
4. Macroeconomic environment catalysis
Dollar liquidity cycle: If the Federal Reserve begins to cut interest rates in 2024, history shows that Bitcoin has an average annualized return exceeding 200% during easing cycles (2019-2021). The correlation coefficient between M2 growth and Bitcoin's market cap reaches 0.85.
Strengthened safe-haven attributes: Amid a global sovereign debt crisis, the 90-day correlation between Bitcoin and gold has risen from 0.2 to 0.6. Some central banks (like El Salvador) have included it in their reserves, and if G7 countries follow suit, it could trigger a paradigm shift.
5. Risks and counterarguments
Regulatory black box: The U.S. SEC may delay ETF approvals, but amid political maneuvering (such as the 2024 election cycle), the probability of compromise is increasing.
Technical bottlenecks: On-chain data (Glassnode) shows that long-term holders (HODLers) control 76% of the circulating supply, with limited short-term selling pressure. Layer 2 scaling (like the Lightning Network) has reached a capacity of 5000 TPS, supporting institutional-grade applications.
Conclusion
If U.S. policy opens the institutional floodgates, Bitcoin's marginal purchasing power will far exceed the current retail-dominated market. Combined with stock consumption (halving), liquidity premium, and macro tailwinds, the driving logic for a 2-5x price increase ($150,000-$500,000) is solid, but caution is needed regarding short-term high volatility and retracement risks (30%-40% drawdowns).
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