Summary Bitcoin is experiencing a resurgence, with the SEC approval of new spot Bitcoin ETFs contributing to rising investor interest and demand. The upcoming Bitcoin "halving" in mid-April will further decrease the rewards for BTC miners, leading to increased demand and limited supply. BTC hit a two-year-high today and will likely - and very soon - exceed its previous high of $65,000+ from November of 2021. In my opinion, BTC could easily continue running up to over $100,000 this year. And I am not alone. Tom Lee, managing partner of Fundstrat Global Advisors, predicts that Bitcoin could reach as high as $150,000. Even if Lee is off by 50%, that's still a 30% gain from here. Don't look now, but Bitcoin is running hot again (see graphic below). The industry has made it through both the collapse of FTX (an extreme negative) and the SEC approval of new spot Bitcoin ETFs and arguably the hype that preceded that approval (very positive). As a result, Bitcoin just hit a two-year high of over $56,700 - the first time BTC has traded over $56,000 since November of 2021. That came on the heels of news Monday that MicroStrategy (MSTR) had purchased an additional 3,000 bitcoins for $155 million (average price of an estimated $51,666/BTC). In my opinion, BTC is poised to significantly exceed its previous high of $65,000+ from back in November of 2021 - and to do so sooner rather than later. Today, I'll discuss fundamental catalysts that indicate why now is a good time for investors to consider allocating some capital to the Fidelity Wise Origin Bitcoin Fund ( FBTC ). Data by YCharts Investment Thesis My followers know that I advise all investors to build and hold a well-diversified portfolio and to start with a top-down capital allocation strategy. Each investor should define the asset-class categories for which he or she wants to allocate capital according to their own specific situations (i.e. age, retired/working, goals, net-worth, etc.). These categories can be, for example, the S&P500, dividend growth, technology, sector ETFs, or growth - among others. In addition, it is my opinion that many investors should consider allocating some capital to the "speculative growth" category, which would contain relatively high risk/reward opportunities. This was my motivation back in November of 2020 when I recommended Seeking Alpha investors take a position in the Grayscale Bitcoin Trust ( GBTC ) after the cryptocurrency received business endorsements by companies like Square (now Block ( SQ )) and PayPal ( PYPL ). See Bitcoin Penetrates Further Into The "Mainstream", It Should Penetrate Your Portfolio Too . Over the next three months, GBTC tripled and became the most rapidly appreciating equity I had ever owned - validating the rationale for holding a "speculative growth" category within the portfolio. Indeed, that one investment was the biggest reason why I significantly outperformed the S&P500 that year. I eventually sold-out all of my position in GBTC as the discount to the price of BTC versus the shares kept expanding. I haven't owned a BTC-based investment since - that is, until earlier this year. In January, I bought a new starter position in the FBTC ETF. As a result, I am back on Seeking Alpha to share the several relatively new bullish catalysts that supported my decision to re-enter the BTC asset class. Let's take a look. SEC Spot Bitcoin ETF Approval As you all know, in early January of this year the SEC finally approved spot-BTC ETFs and, as expected, a plethora of new products came to market. The chart below shows a few of the bigger offerings and their current market-caps per Seeking Alpha at pixel time: Bitcoin Spot ETF Market-Cap Fidelity Wise Origin Bitcoin Fund $5.1 Billion iShares Bitcoin Trust ETF ( IBIT ) $7.1 Billion Bitwise Bitcoin ETF ( BITB ) $1.3 Billion ARK 21Shares Bitcoin ETF ( ARKB ) $1.7 Billion ProShares Bitcoin Strategy ETF ( BITO ) $2.3 Billion TOTAL $17.5 Billion The total market-cap of these 5 ETFs - over $17 billion - is a clear sign of strong investor interest and rising demand for Bitcoin. When you throw in GBTC, which has a current market-cap of $24.2 billion but actually saw withdrawals when the spot BTC ETFs came out, investors have $40+ billion in Bitcoin ETFs. The point is this: these funds, and the companies that run them, have effectively institutionalized Bitcoin as an asset class . That bodes well for the price of Bitcoin going forward. I say that because, historically, net-new buyers have driven BTC adoption and constructive price appreciation, and the institutionalization of BTC via these new spot ETFs have obviously attracted a lot of net-new buyers. Bitcoin Mining Update The graphic below is from buybitcoinworldwide.com : buybitcoinworldwide.com As you can see, there are currently (as of pixel time this morning, Monday Feb. 27th), an estimated 19.639 million total BTC in existence (~93.52% of the total possible). Given the current BTC price of $56,911, that implies a current total BTC market-cap of $1.118 trillion. Bitcoin "Halving" The next Bitcoin "halving" event is expected to take place in mid-April. During a bitcoin "halving", the rewards that BTC miners (those companies and individuals that use computers to solve the mathematical problems, process, and validate transactions on the BTC blockchain network) are paid is cut in half. In 2009, when Satoshi Nakamoto first introduced the asset, the reward was 50 BTC. Nakamoto designed the BTC algorithm to cut those rewards in half every 210,000 blocks. There have been multiple Bitcoin halvings in the past, and after the one expected in April (on "4/20" for all you conspiracy theorists out there ...) the reward will shrink to only 3.125 BTC. What this means is that while demand for BTC is growing significantly (i.e. see the previous section ...), the reward for mining new BTC will soon drop significantly. And, of course, by the Bitcoin algorithm, the total number of Bitcoin will forever be capped at 21 million. So, this is economics 101: demand is far out-stripping supply. Tom Lee's Bullish Call Last week, Tom Lee - managing partner Fundstrat Global Advisors - and a man who has established an excellent track record during the current bull-market, suggested that Bitcoin could reach $150,000 by year-end: I think it's [Bitcoin], you know, could be as high as $150K. You've got demand improving with the ETF and you have the supply shrinking ... and if monetary policy eases which we expect, you know, that's supportive of risk assets and Bitcoins holding up and I mean it's another reason why I don't think a drawdown is going to start that soon. Consider this: even if Tom Lee's prediction is off by 50% (i.e. BTC rises to only $75,000 by year-end), that is still a 30%+ gain from here (the current price at pixel time is $56,911). The FBTC ETF You can find details and the prospectus on Fidelity's FBTC webpage . The ETF is basically a way that investors can gain easy exposure to the price of Bitcoin in a brokerage, trust, and/or tax-advantaged qualified retirement accounts. The expense fee is 0.25%, but Fidelity is waiving the expense fee until 7/31/2024 - so for now, the expense fee is 0.00%. Note that owning the FBTC ETF is not equivalent to actually purchasing and holding BTC yourself (i.e. for one, you will not receive actual Bitcoin if you redeem your shares). Risks Obviously, the cryptocurrency space is highly volatile and can be impacted by a number of variables: investor sentiment, interest rates, currency exchange rates, and governmental policies - both regulatory and legislative. Upside risks include growing interest (i.e. demand) in owning Bitcoin through the new spot-price ETFs and what appears to be another bull-run in the making. I think there is a good chance that Bitcoin will not only go onto set new highs this year - we could potentially see BTC exceed $100,000 for the first time ever this year. Summary & Conclusion Investors building and holding well-diversified portfolios should consider allocating some capital to the high risk/reward "speculative growth" category. Within that category, investors should consider an allocation to the Fidelity Bitcoin ETF: FBTC. That is because a well-diversified portfolio that includes non-correlated assets (like Bitcoin and precious metals, for example) can actually reduce your overall investment risks - and increase returns . That said, the key is prudent application of the top-down allocation strategy: don't allocate a larger percentage of your capital into "speculative growth" assets than you are willing to lose. And, if you are lucky (skilled?) enough for them to appreciate, remember to take profits along the way. For instance, when I made my first investment into GBTC, it rose so rapidly that I was able to sell a few shares to totally cover my initial cost-basis. From that point on, I was - as they say in Las Vegas - gambling on the house's money. I'll end with a YTD chart of the FBTC ETF and note that if you check closely, the year-high on FBTC was $50.70, which occurred on the first day of trading (far left of the chart below) when the price of BTC was actually ~$10,000 lower than it is today. In my opinion, that speaks to the risks of investing during "hype" moments when the herd's fear of missing out "FOMO" can push bid-ask prices of assets like this to be very volatile and irrational. Investors who simply waited a few weeks were rewarded with a much more rational entry point. Regardless, you can buy FBTC today at significantly less that the $50.70 high despite the fact that BTC itself has rallied over $10,000 since that high was put in. Data by YCharts
