in interview With Yahoo Finance's “Wealth,” Rick Edelman, founder of the Digital Asset Council for Financial Professionals and $291 billion asset manager Edelman Financial Services, provided a startling prediction for Bitcoin's price. Edelman argued that the price of Bitcoin could rise to $420,000, and attributed this potential rise to a modest global asset allocation towards Bitcoin.
Why will Bitcoin price reach $420,000?
During the interview, Edelman delved into the advantages of investing in spot Bitcoin ETFs. He noted that these tools make bitcoin accessible in the same way as traditional ETFs, which are popular and familiar to investors who use regular brokerage accounts.
“It's incredibly inexpensive, 20-25 basis points cheaper than Coinbase or another cryptocurrency exchange, and being in a brokerage account, you can rebalance, you can dollar-cost average, and you can capture taxes on losses,” Edelman explained. This setup simplifies the investment process, making it closer to managing any other asset class, thus broadening its appeal to a wider audience.
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However, Edelman was also frank 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 remains. “It's still Bitcoin, which means it's still very volatile, and it's still very risky. You can still lose everything,” he warned.
Edelman pointed to ongoing regulatory uncertainty, potential lawsuits and prevalent fraud as significant risks that investors need to manage carefully. He also criticized the fear of missing out (FOMO) investment trend, calling it a poor investment justification.
Looking to the future, Edelman discussed the regulatory landscape, particularly regarding other cryptocurrencies like Ethereum. He noted that there are several pending applications for Ethereum ETFs, and while initial rejections are expected, approvals could follow by the end of the year.
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“After you have Bitcoin ETFs and Ethereum ETFs, I'm not sure how quickly you'll see anything else after that, but those two will kind of open the doors in the long run. Five years from now, there will be dozens, maybe Even hundreds of crypto ETFs,” Edelman predicted. This perspective underscores a significant shift towards mainstream acceptance and integration of cryptocurrencies into traditional financial products.
Edelman's prediction that Bitcoin will reach $420,000 is based on the assumption of global asset diversification. By his calculations, if all global asset holders allocated just 1% of their assets to Bitcoin, this would translate into a market value of $7.4 trillion for Bitcoin alone.
“It's remarkably simple. If you look at the global assets in the world, the value of the stock market globally, the bond market, the real estate market, the gold market, just look at all the assets that every person in the world has, it's about $740 trillion.” . ,” It is to explain. Such an allocation would significantly increase the market value of Bitcoin, causing its price to rise significantly.
Furthermore, Edelman highlighted the shift in the perception of Bitcoin from a transactional currency to a store of value, similar to gold. “Bitcoin's use case, while powerful in transportation, is not the strongest argument. It is now, like gold, a store of value. This shift in perception has attracted more institutional investors, who view Bitcoin as a hedge or alternative asset class, similar to non-investments. Other traditional works of art or collectibles.
At press time, Bitcoin was trading at $61,909.
Featured image of Wealth Management, chart from TradingView.com