Since the beginning of this year, the mainstream narrative regarding Bitcoin's price has frequently changed, sometimes viewing it as correlated with gold's trends and at other times with the Nasdaq index. However, analysts from the research and brokerage firm Bernstein believe that the short-term correlation can be misleading. In contrast, the exhaustion of retail selling pressure, the intensification of corporate accumulation races, and the fund inflow back into exchange-traded funds (ETFs) are better indicators. These phenomena together form a potential 'supply squeeze' that could drive Bitcoin to new highs.
Several companies join the ranks of Bitcoin accumulation
Last week, SoftBank, Tether, Bitfinex, and Cantor Fitzgerald announced the establishment of a Bitcoin financial company called 'Twenty One Capital', which is expected to hold over 42,000 Bitcoins at launch. Analysts from Bernstein, led by Gautam Chhugani, pointed out in a report to clients on Monday that Twenty One will receive $900 million from SoftBank, $1.5 billion from Tether, and $600 million from Bitfinex. The company plans to raise an additional $585 million through a SPAC merger with Cantor Equity Partners once the deal is completed—$385 million through convertible notes and $200 million through common stock issuance.
"The goal of Twenty One is to replicate the Bitcoin strategy of Strategy, even though it starts from a smaller capital scale," Bernstein analysts stated. "In any case, the competition for Bitcoin accumulation is becoming increasingly intense."
Analysts added that there are currently about 80 companies collectively holding approximately 700,000 Bitcoins, accounting for 3.4% of Bitcoin's total supply.
ETF fund inflow back
Chhugani pointed out that after about two months of subdued capital flows, the annual net inflow of the US spot Bitcoin ETF has turned positive again, with total inflows exceeding $3 billion last week, marking the highest level in five months and the second highest in history.
Source: SoSoValue
Currently, over 5.5% of Bitcoin's total supply is held by spot ETFs, amounting to approximately $110 billion. Analysts point out that about 33% of these assets are held by institutional investors, up from 20% in September of last year. Of this 33%, 48% is held by investment advisors (possibly representing portfolio allocation needs), and another 31% is held by hedge funds (potentially for basis trading).
Data source: Bernstein, Image source: The Block
Analysts indicate that, in total, all Bitcoin ETFs and corporate holdings currently account for nearly 9% of Bitcoin's total supply, which is seven times that of when the ETFs were launched in January 2024.
Additionally, Bernstein stated that the executive order on the US Bitcoin strategic reserve signed by President Trump may accelerate Bitcoin adoption at the sovereign nation level, the analysts wrote:
"In our view, the current momentum driven by corporations and institutions is sufficient to push Bitcoin to new highs by 2025. However, if the US government purchases a large amount of Bitcoin, it could trigger a global shift in competitive Bitcoin accumulation among sovereign nations, a scenario that has certainly not yet been reflected in prices."
Price target
Bernstein analysts estimate that Bitcoin will reach a cycle peak of about $200,000 by the end of 2025, $500,000 by the end of 2029, and $1,000,000 by the end of 2033, with several one-year bear market adjustments in between.
"In the long term, we believe that Bitcoin's fundamentals are driven by its own demand trajectory and its mathematically verifiable fixed supply of 21 million. Currently mined Bitcoins total 19.9 million, and nearly 95% of the remaining 1.1 million Bitcoins will be mined within the next 10 years," analysts stated. "In our view, given the current supply and demand conditions, it is difficult to hold a pessimistic outlook on this asset."
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