Excessively high price estimates for Bitcoin (BTC) are not uncommon in this industry. However, many analysts and investors believe that Bitcoin could rise to $100,000 in the next 12 months. Matt Hougan, Chief Investment Officer at Bitwise, also believes Bitcoin will rise by more than six figures.
source: mat hogan
Let’s take a look at the data supporting Bitcoin’s price above $100,000.
Spot Bitcoin ETF Inflows Highlight Strong Institutional Demand
Growing demand for spot Bitcoin ETFs, which have seen an impressive $2.11 billion in net inflows since October 11, is one reason for BTC’s recent price strength. Launched in January 2024, the ETF currently has over $60 billion in assets under management, indicating significant institutional interest.
The US Bitcoin ETF aggregates USD flows. Source: Coinglass
From a macroeconomic perspective, Hougan points to the upcoming US presidential election on November 5. Republican presidential candidate Donald Trump also expressed strong support for Bitcoin and the inclusion of cryptocurrencies in financial markets, and candidate Kamala Harris said she would encourage the development of cryptocurrency projects and companies in the United States. We expected a regulatory-friendly stance.
Soaring U.S. debt highlights the problem of government overspending.
Total U.S. public debt, $1 billion. source: Luke Broyles
Hougan also emphasizes that the U.S. government deficit has reached unsustainable levels, made possible by a bipartisan agreement to raise the debt limit.
In just two weeks, America’s public debt has surged by $500 billion, reaching an all-time high of $35.8 trillion. This excessive government spending weakens the U.S. dollar, further increasing the value of scarce assets such as Bitcoin, gold, and stocks. Accordingly, the central bank may need to continue cutting interest rates to ease the government’s debt repayment burden.
The daily interest cost of U.S. public debt is $1 billion. source: Apollo Academy
Interest costs on U.S. public debt have exceeded $3 billion a day, according to Apollo data. This situation puts the Fed in a difficult position, because lowering interest rates typically spurs inflation and risks overheating the economy. Hougan points out that China’s recently announced stimulus package is also contributing to pushing the price of Bitcoin closer to $100,000.
Historically, Bitcoin has been positively correlated with global base currencies as measured by its M2 supply, which includes bank deposits and money market funds. Increased liquidity encourages more risk taking among investors. During periods of economic expansion, when recession risks are low, traders tend to seek higher returns than fixed income investments.
relevant: A Trump election victory could push BTC to $100,000 and push altcoins further.
If whales accumulate Bitcoin, a ‘supply shock’ will occur
Bitcoin exchange whale ratio chart. Source: Woo Min-gyu
Analysis by CryptoQuant’s verified author Minkyu Woo shows that the current accumulation pattern is similar to the rate observed in July 2020, when the price of Bitcoin surged 550% in just six months.
Hougan highlights that Bitcoin accumulation among large holders has reached 1.6 million BTC in the past six months, according to CryptoQuant. This accumulation is causing a ‘supply shock’ as the supply of salable coins cannot keep up with the growing demand from institutional investors.
This article should not be considered legal or investment advice generally. The views, thoughts and opinions expressed herein are those of the author alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.