Bernstein sees Bitcoin rebounding, with a potential bottom near $60,000

• Bernstein notes that the ongoing pullback in the crypto market may be short-lived, with Bitcoin potentially starting a recovery in the first half of the year.
• The firm’s analysts point to rising institutional inflows and shifting US policy dynamics as factors that could underpin what they describe as Bitcoin’s “most consequential cycle.”
• Other market participants anticipate capital rotation away from “overcrowded” precious metals and into Bitcoin.

Bitcoin may find a price floor near its previous cycle peak in the $60,000 area before staging a potential recovery in the first half of the year, according to analysts at Bernstein.

Led by Gautam Chhugani, the analysts noted that the recent pullback in crypto prices follows a period of strong outperformance by gold relative to Bitcoin over the past year. They added that Bitcoin’s market capitalization compared to that of gold is nearing a two-year low, as central banks have significantly increased their gold purchases over the past year.

Bernstein added that the recent market softness may represent a short-lived correction rather than the start of a prolonged bearish cycle, driven by several underlying factors.

New catalysts help Bitcoin remain resilient despite price weakness

The firm argued that robust institutional inflows into Bitcoin ETFs — which now hold roughly $165 billion in assets — alongside growing allocations from corporate treasuries, have helped the market move beyond the traditional boom-and-bust cycle.

Bernstein also pointed to the lack of miner-led capitulation, a feature commonly seen in past market downturns. Instead, miners have increasingly diversified their revenue by expanding into AI-focused data center operations, reducing their reliance on Bitcoin price fluctuations.

US policy developments were cited as another potential upside catalyst. Bernstein highlighted the creation of a Strategic Bitcoin Reserve funded by seized government BTC holdings, while potential changes in Federal Reserve leadership under nominee Kevin Warsh could further enhance Bitcoin’s standing. The analysts suggested that broader political alignment with the crypto sector could pave the way for Bitcoin to be viewed as a sovereign or reserve-like asset.

“We do not expect a passive response from the U.S. government if digital asset markets continue to decline,” the analysts wrote.

The latest assessment follows Bernstein’s projection last month that Bitcoin had bottomed near $80,000. At the time of publication, the world’s largest cryptocurrency was trading around $78,000, up 1.8% over the past few hours.

Sources: Michael Ebiekutan