Bitcoin (BTC-USD) prices have continued their remarkable ascent, surpassing the $72,000 mark for the first time in its history. This surge has been fueled by a substantial increase in demand thanks to the approval of bitcoin exchange-traded funds (ETFs), with some strategists predicting that the cryptocurrency could surpass $100,000 by the end of the year.
Yahoo Finance's Josh Schafer and David Hollerith break down the details, providing insights into how supply and demand dynamics have contributed to the surge in bitcoin prices.
For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.
Editor's note: This article was written by Angel Smith
Video Transcript
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JULIE HYMAN: Bitcoin hitting another all time high after eclipsing $72,000 today. But the cryptocurrency has a ways to climb if some industry targets are to be believed. Yahoo Finance's David Hollerith and Josh Schafer are here to hammer this one. You guys have been trying to get to the bottom of, how do they get to these targets? So, first of all, let's talk about what are the targets--
JOSH SCHAFER: Sure.
JULIE HYMAN: --and what people on Wall Street are expecting from this.
JOSH SCHAFER: Yeah, so there's a range of targets here, Julie. Unsurprisingly, most of them are higher. I think most people that see Bitcoin going lower don't even engage in this exercise. I think that's an important thing to start off with here. A lot of people that would say Bitcoin is going to go lower or have a quote, unquote, "sell rating," as we often say, aren't even engaging in making a price target for the cryptocurrency.
But some of the targets that we highlighted here-- Standard Chartered Bank saying Bitcoin is going to go to $100,000 by year end. SkyBridge sees $110,000 by year end. Fundstrat's Tom Lee has made a public call of $150,000 for the biggest cryptocurrency in the world. A lot of what these different firms seem to be highlighting is, essentially, it's a demand-driven product, right? We're really just talking about demand and how that's going to move price.
The ETFs brought a lot more demand than we had previously seen for the crypto. Not all the coins are mined, right? So as demand goes up, price is going to go up. It's a little bit of a basic scenario when it comes to that. David, you've also-- you've covered crypto a little bit more closely than I have. I'd be curious just sort of what you make of what these analysts told us about the base case here and what their reasoning was.
DAVID HOLLERITH: Yeah, I mean, there's an element to this compared to S&P price targets where it is a little bit more-- there are more assumptions that are made. But when you actually dig into it, it is based around supply and demand. And there's some of that can be modeled.
And these people are trying to do it, which it's still not easily done. And the interesting thing I think we found was just that there is a little bit of math and science behind it and it's not totally coming out of nowhere, as much as like some people think. But also too, you know, it takes one or two more leaps than--
JOSH SCHAFER: Yeah, well, it was interesting. [? Arc ?] highlighted too, David, that they were telling me-- they use a top-down approach instead of a bottom-up approach, right? And you hear those types of things a lot of times in typical stock analysis, and top-down meaning that they're essentially assuming what the overall market size of Bitcoin could be by saying that Bitcoin is digital gold. So if we make that assumption and gold is 1% to 5% of an allocation in a traditional portfolio and Bitcoin were to replace that, you can start doing some fancy math-- I can see Sozzi's head turning right now--
BRIAN SOZZI: I want to ask you for your price prediction.
JOSH SCHAFER: --on what that turns into for a market cap.
BRIAN SOZZI: Yeah.
JOSH SCHAFER: And then that's how you sort of get the numbers. It's a big assumption to assume that we're all going to take our gold allocations in our portfolios and just turn them into Bitcoin.
BRIAN SOZZI: I want to ask you, because you've been our guy here at Yahoo Finance covering these wild swings all the way down from the Bankman-Fried shenanigans, you name it. Does this time feel different? Does this feel like really, this is crypto's moment and Bitcoin over $72,000 is just the starting point?
DAVID HOLLERITH: Yeah, I mean, I'm not going to invoke the magic words, but I think that the ETFs are definitely a unique place where it seems like there's like this buying demand for it. But as we keep talking about supply and demand, at the end of the day, I think still, the use cases are demand is speculative. And so we don't really know where that goes. And so I think there still is an issue of that when you're looking at all cryptocurrencies longer term.
But then obviously there's tons of believers who do see that. And one day, it might be there. And you know who am I to say that? So as far as it being different, I would say I don't think it is different. But the market is very different. The demand is different. The use is about the same.
