A US Bitcoin reserve could push Bitcoin to $500,000, says Fundstrat

As the Bitcoin price hovers around the $100,000 mark, Sean Farrell, Head of Digital Asset Strategy at Fundstrat, remains unfazed by speculation about an overheated crypto market.

I’ll keep talking EmbossingFarrell rejected the idea that the current rally has peaked. “I don’t think we are at a cycle top or very close to it,” he asserted, emphasizing that key market indicators and on-chain metrics are still far from danger zones.

Farrell pointed out that there is remarkably no excessive debt this cycle compared to the last cycle. “Last cycle we had…a lot of unhealthy leverage…maybe definitely illegal leverage,” he joked, with a nod to FTX and Alameda. This time he sees a healthier market structure, based more on spot demand than leverage. “The flows were still pretty consistent. Spot volumes…continue to increase overall,” he added.

As speculative enthusiasm returned, Farrell acknowledged the resurgence of legacy tokens like XRP and Cardano. While he expressed some skepticism about the ongoing rally behind these names, he highlighted the continued strength of stablecoin issuance and ETF inflows, particularly in Ethereum. “ETF inflows have been solid… especially compared to Bitcoin ETF inflows,” he noted, indicating increasing institutional interest in ETH.

This institutional dynamic led Fundstrat to add Ethereum back to its core portfolio after a long underweight position. Farrell explained, “The marginal buyer for Ethereum right now is TradFi,” attributing the shift to growing ETF inflows and CME futures activity. He believes that Ethereum is increasingly being perceived by traditional financial players as a technology-like asset, comparable to an unprofitable growth-oriented technology stock.

When discussing price targets, Farrell was moderately optimistic. While Bitcoin’s next move could be driven by speculative bets on a potential U.S. Bitcoin Strategic Reserve, he described the likelihood of such an event as extremely difficult to predict. “If a strategic reserve were announced… we are on a very fast path to $500,000,” he speculated, but warned that such a scenario was still a long way off.

Travis Kling, founder of Ikigai Asset Management, also mentioned in his interview on Coinage this week that there are two different paths.

“The main driver for this cycle will be whether or not we get a strategic Bitcoin reserve,” Kling said. If such a reserve comes into being, “you’re talking about over $300,000 worth of Bitcoin… because I think that would trigger a bidding war for treasuries.”

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