In a interview With Yahoo Finance's “Wealth,” Ric Edelman, founder of the Digital Assets Council of Financial Professionals and $291 billion asset manager Edelman Financial Services, provided a striking prediction for the price of Bitcoin. Edelman argued that the price of Bitcoin could rise as high as $420,000, attributing the potential rise to a modest global asset allocation in favor of Bitcoin.
Why Bitcoin Price Will Reach $420,000
During the interview, Edelman explored the benefits of investing in Spot Bitcoin ETFs. He noted that these instruments make Bitcoin accessible in the same way as traditional ETFs, which are common and familiar to investors using regular brokerage accounts.
“They are incredibly cheap, 20-25 basis points cheaper than Coinbase or another crypto exchange and being in a brokerage account you can rebalance, you can cost average, you can tax loss harvesting,” Edelman pointed out. This setup simplifies the investment process, making it comparable to managing any other asset class, thereby broadening its appeal to a wider audience.
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However, Edelman has also been outspoken about the challenges and risks associated with Bitcoin. Despite the advantages offered by ETFs, the inherent nature of Bitcoin as a volatile and risky investment persists. “It’s still Bitcoin, which means it’s still very volatile, it’s still very risky. You could still lose everything,” he warned.
Edelman highlighted continued regulatory uncertainty, potential lawsuits and widespread fraud as significant risks that investors should manage with caution. He also criticized the tendency to invest out of fear of missing out (FOMO), calling it a poor investment rationale.
Looking ahead, Edelman discussed the regulatory landscape, particularly regarding other cryptocurrencies like Ethereum. He noted that several applications were pending for Ethereum ETFs and that while he expected initial rejections, approvals could follow by the end of the year.
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“After having the Bitcoin ETFs and the Ethereum ETF, I don't know how quickly you'll see anything else after this, but these two will kind of open the doors in the long run. In five years, there will be dozens, if not hundreds, of crypto ETFs,” Edelman speculated. This outlook highlights a significant shift toward widespread acceptance and integration of cryptocurrencies into traditional financial products.
Edelman's prediction that Bitcoin would reach $420,000 is based on the following assumption: global diversification of assets. According to his calculations, if all global asset holders allocated just 1% of their assets to Bitcoin, this would result in a market capitalization of $7.4 trillion for Bitcoin alone.
“It’s remarkably simple. If you look at global assets, the value of the stock market, the bond market, the real estate market, the gold market, you look at all the assets that everyone owns, that's about $740 trillion. ,” he explained. Such an allocation would significantly increase the market capitalization of Bitcoin, driving its price significantly higher.
Additionally, Edelman highlighted a shift in the perception of Bitcoin from a transactional currency to a store of value, similar to gold. “The Bitcoin use case, while strong for transmission, is not the strongest argument. It's like gold now, a store of value,” he said. This change in perception has attracted more institutional investors, who view Bitcoin as a hedge or alternative asset class, similar to other non-traditional investments like works of art or objects of collection.
At press time, BTC was trading at $61,909.
![Bitcoin Price](https://www.newsbtc.com/wp-content/uploads/2024/05/BTCUSD_2024-05-15_08-37-58.png?resize=3628%2C1673)
Featured image from Wealth Management, chart from TradingView.com