Bitcoin Outlook: Anticipating a New All-Time High in Q2

- Strategic asset reallocation away from US assets is expected to propel Bitcoin to a new all-time high.

- Several indicators support this prediction: high US Treasury term premium, BTC time-of-day analysis, strong accumulation by Bitcoin 'whales', and ETF flows shifting from gold to BTC.

- Although timing the upswing is challenging, we anticipate it is imminent and expect a new all-time high in Q2.

- Our forecast for the end of 2025 is USD 200,000, which will then be within reach.

Strategic Asset Reallocation

We anticipate a strategic shift away from US assets will trigger a significant upswing in Bitcoin (BTC) in the coming months. Historically, BTC has experienced sharp rises followed by periods of stability, making the timing of these upswings crucial. Currently, BTC is approximately USD 95,000, which is seven times higher than its cycle lows in November 2022.

Several indicators suggest Bitcoin is poised for another upward move. The US Treasury term premium, closely linked to BTC, is at a 12-year high. Time-of-day analysis indicates US investors may be seeking non-US assets. Additionally, major holders, or 'whales', are accumulating Bitcoin. Recent ETF flows also show a shift from gold to BTC as a safe-haven asset.

We expect these factors to drive BTC to a new all-time high of around USD 120,000 in Q2. We anticipate continued gains throughout the summer, moving BTC towards our year-end target of USD 200,000.

Getting it right when it counts

2024 marked a pivotal year for Bitcoin, with its price surging from USD 42,500 to USD 108,000, briefly exceeding this on January 20, 2025. Despite mostly sideways movement throughout the year, notable gains occurred in February/March following the US ETF approval, and October/November during Trump's election victory. Including 2023, significant price increases have occurred only during three key periods since the cycle low of USD 15,500 in November 2022:

1. March 2023 after the SVB collapse, when we predicted Bitcoin would reach USD 100,000 by end of 2024.

2. Late 2023 leading up to ETF approval and early 2024 with the ETF reality.

3. The US election period in October/November 2024.

Investors who timed these periods effectively saw substantial returns, while others saw minimal gains, highlighting the importance of timing. We do not anticipate a linear rise towards our year-end forecast but expect the next significant increase soon.

A hedge against financial system risks

Bitcoin serves as a hedge against risks to the financial system, offering advantages over gold due to its decentralized nature, though gold remains superior against geopolitical risks and is less correlated with risky assets, performing better amid tariff escalations.

Bitcoin's hedge role unfolds through:

1. Private-sector risks, like the SVB collapse in March 2023.

2. Government-sector risks, such as US Treasury risk.

When risks are low, Bitcoin trades like a tech stock. Recent threats to Fed independence, tariff escalations, and US policy concerns are prompting a shift away from US assets. The US Treasury term premium for the 10-year bond is at a 12-year high, suggesting this shift is happening. Bitcoin gains may soon match recent gold gains, as ETF flows indicate a rotation from gold to Bitcoin. Other indicators also point to Bitcoin's potential rise. US investors have been buying Bitcoin since Trump's tariff reprieve announcement on April 9, with Asian investors joining recently, indicating a move towards non-US assets. Additionally, 'whale' investors, holding over 1,000 BTC, have increased their holdings during price fluctuations, similar to past strategic periods like the SVB collapse and BTC ETF approval, suggesting current conditions are significant for Bitcoin's price.

Conclusion:

Predicting sharp Bitcoin rises is challenging, but the current shift from US assets may trigger an upswing. We anticipate a new all-time high by Q2, with further gains over the summer, maintaining our year-end forecast of USD 200,000. The US Treasury term premium will be crucial in assessing ongoing asset reallocation, alongside time-of-day analysis and 'whale' accumulation. A move from gold ETFs to Bitcoin ETFs would indicate Bitcoin as a preferred hedge against financial risks. Mid-May 13F filings for US ETFs could show increased long-term investment by pension and sovereign wealth funds. We also expect US stablecoin legislation to pass this summer, enhancing the legitimacy of the asset class and supporting price growth.