Bitcoin’s price is poised for a significant surge in the coming months. This increase is driven by rising demand and a decrease in exchange supply. BTC is also supported by strong technical indicators, including the daily chart’s emerging cup and handle pattern.
This article explores the bullish case for Bitcoin by examining its evolution from retail to institutional investment and how sovereign demand will further boost its price.
Retail, Institutional, and Sovereign
Bitcoin has gone through three key phases. Its initial rally was mainly driven by retail investors who strongly believed in its mission as an alternative to the US dollar. Most institutions have not participated for a long time due to concerns about their volatility and regulations.
The situation began to change during the pandemic when Bitcoin’s price became too expensive for many retail investors. Many of them began exploring altcoins, which are generally cheaper than Bitcoin and have some correlation with it.
This period also saw companies like Tesla, MicroStrategy, and Square start acquiring Bitcoin as part of their diversification efforts. This strategy transformed MicroStrategy from a small-cap company worth less than $1 billion into a major organization valued at over $115 billion.
Institutional demand has surged following the Securities and Exchange Commission (SEC) launch of spot Bitcoin ETFs. These ETFs enabled companies to invest in Bitcoin without dealing with keys. Since their approval in January, these funds have accumulated over $41 billion in assets.
The next phase of Bitcoin price growth will come from sovereigns or central banks. Some countries, such as the United States, the Czech Republic, and Poland, have expressed hopes for a Strategic Bitcoin Reserve. Similarly, some US states, including New Hampshire, have embraced these reserves.
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Many countries will likely start adding Bitcoin to their reserves as they seek to diversify their US dollar holdings. For example, China holds gold worth $194 billion, while Russia has $200 billion. If China and Russia decided to buy Bitcoin equivalent to 5% of their gold holdings, it would create approximately $20 billion in demand.
Institutional and sovereign demand is increasing as Bitcoin supplies on exchanges fall to a five-year low.
Bitcoin Price Short-Term Target
The daily chart indicates that Bitcoin’s price has gradually formed a cup and handle pattern, with the upper side at $108,300 and the lower at $74,000. This pattern often leads to a bullish continuation.
The cup’s depth is about 30%, indicating a likely target of $140, estimated by measuring the same distance from the cup’s upper side. The long-term Bitcoin forecast is bullish, with some analysts expecting it to hit $1 million over time.
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