Institutional adoption of Bitcoin (BTC) and related crypto assets is set to surge, according to a recent research report by Bernstein. The brokerage firm anticipates a substantial uptick in institutional interest, driven by forthcoming approvals of spot Bitcoin Exchange-Traded Funds (ETFs) on major wirehouses and large private bank platforms in the third and fourth quarters of 2024.

Bernstein’s analysts, Gautam Chhugani and Maihka Sapra, underscored the transformative potential of these developments, noting that Bitcoin and crypto-linked stocks are currently undervalued relative to their potential for institutional adoption. While initial allocations to Bitcoin ETFs predominantly stemmed from retail investors, Bernstein believes that institutional demand is poised for a significant expansion beyond the “basis cash and carry trade” strategy.

The “basis trade” involves simultaneously purchasing spot Bitcoin ETFs and selling Bitcoin futures contracts, leveraging the price differential between the two instruments. This strategy has served as a gateway for institutions to enter the crypto market cautiously, focusing on arbitrage opportunities while assessing broader market dynamics and liquidity improvements.

According to Bernstein’s projections, the approval of spot Bitcoin ETFs earlier this year marked a pivotal moment by democratizing access to Bitcoin for a broader investor base in the United States of America. The expected acceleration in Bitcoin ETF inflows during the latter half of 2024 is anticipated to fuel the next wave of the institutional adoption. Major advisers are poised to incorporate Bitcoin ETFs into their offerings, potentially reallocating substantial portions of existing portfolios to accommodate the growing demand for digital assets.

The research report outlines ambitious price targets for Bitcoin, forecasting a cycle high of approximately $200,000 by 2025, $500,000 by 2029, and an impressive milestone of $1 million by 2033. These predictions reflect Bernstein’s bullish outlook on Bitcoin’s long-term growth prospects, underpinned by increasing institutional participation and sustained retail investor interest.

In terms of specific stocks, Bernstein maintains an optimistic stance on the Bitcoin miners Riot Platforms (RIOT) and CleanSpark (CLSK), highlighting their potential to outperform in the evolving crypto landscape. Additionally, the brokerage firm favors software company MicroStrategy (MSTR) and trading platform Robinhood (HOOD), both of which are seen as pivotal players in facilitating mainstream adoption of the Bitcoin and other various cryptocurrencies.

The report’s insights into the strategic positioning of these stocks underscore the broader implications of institutional adoption for the entire crypto ecosystem. As traditional financial institutions embrace digital assets, Bitcoin and related technologies are poised to play an increasingly integral role in global finance and investment strategies.

Looking ahead, Bernstein’s analysis signals a paradigm shift in how institutional investors perceive and integrate Bitcoin into diversified portfolios. The anticipated approvals of spot Bitcoin ETFs represent a critical milestone in expanding market accessibility and liquidity, paving the way for sustained growth and maturity in the cryptocurrency market.

In conclusion, Bernstein’s bullish outlook on Bitcoin and crypto-related stocks reflects a broader trend towards institutional adoption, driven by regulatory advancements and evolving investor preferences. As the digital asset landscape continues to evolve and these developments are expected to redefine the investment strategies and reshape the future of finance on an entire global scale.