Analyst With $110K BTC Price Target Warns of ETF Volatility

Bitcoin made its Wall Street debut, but the asset dipped not long after

By: André Beganski

January 12, 2024

This week’s approval of spot Bitcoin ETFs in the U.S. could potentially unlock billions of dollars of inflows into crypto’s top coin. But 3iQ’s Head of Research Marks Connors told Coinage in an interview that investors should brace for outsized volatility over the short term.

“I'm very optimistic on [Bitcoin’s] adoption and price,” he said. “But we're [encouraging] a little bit of caution because it's going to be volatile.”

Bitcoin’s price bounced as high as $48,700 as several ETFs made Wall Street debuts on Thursday, according to data from CoinMarketCap. However, when markets opened in the U.S. on Friday, Bitcoin fell 5.6% from $46,000 to $43,300 in less than three hours. Connors said that jitters among traders aren’t uncommon, and spot Bitcoin ETFs could work for some in tax-advantaged brokerage accounts like IRAs. 

“Last cycle, over 90% of people who held assets on exchange lost money because they traded [Bitcoin, and] they got shaken out,” he said. “A retirement account may be a good way to put it away, so you don't see it, and maybe start small. But again, [that’s] not investment advice.”

Despite the prospect of stomach-churning price swings, Connors predicted Bitcoin could top $110,000 this cycle, citing Bitcoin’s performance amid previous halvings as a factor. This year, Bitcoin’s block subsidy — the reward that miners earn from mining Bitcoin — is due to be cut in half in April, increasing Bitcoin’s scarcity as less fresh Bitcoin enters the market.

Still, Bitcoin ETFs had a surprisingly fruitful first day of trading, said Bloomberg ETF analyst James Seyffart on X, highlighting net inflows of $625 million across 11 exchange-traded products. He said $95 million worth of outflows from Grasycale’s Bitcoin Trust were a “fraction” of what he expected for the $27 billion Bitcoin fund.

In terms of inflows, the analyst pointed to Bitwise’s Bitcoin ETF as an early victor, which saw investors scoop up $280 million worth of shares on the product’s first day. Bitwise’s first-day pick-up outpaced products from legacy financial firms too. The Fidelity Wise Origin Bitcoin Fund and Blackrock’s iShares Bitcoin trust notched $227 million and $112 million, respectively.

While Bitcoin took a breather on Friday morning, intense fluctuations may be temporary, said Grayscale’s Managing Director of Research Zach Pandl. He predicted Bitcoin’s characteristic volatility could fade as spot Bitcoin ETFs gain traction, potentially increasing the asset’s correlation with other assets on Wall Street like equities as time goes on as well.

“Bitcoin’s price volatility has been declining over time as the asset class has matured. I think that we can expect that to continue,” he said. “A broader and deeper investor base brought about by the ETF is likely something that'll help lower volatility over time. It probably will also cause the correlation between Bitcoin and other asset classes to go up.”


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