Debasement trade to take bitcoin to $300,000 in three years, Bernstein says

The debasement trade is experiencing a revival, and that could catapult bitcoin to a new all-time high, according to Bernstein. The flagship digital asset could surge to $300,000 per token by the end of 2029, Bernstein analysts said Wednesday in a note to clients. That's 285%, or nearly four times, the price at which it was last trading. "Following our price-to-marginal cost framework, we would expect the next market peak to be $300K by CY2029E and the market recovering to [a] new all-time high of $150,000 by mid-2027," analyst Gautam Chhugani said in the note. The forecast comes as the debasement trade, or the rotation into tangible or scarce assets as a means of hedging against a weaker U.S. dollar, gains traction due to concerns over the size of the national debt and stubborn inflation. Earlier this month, U.S. federal debt crossed a record $40 trillion , or double that owed by the federal government in 2016, leading investors to sound the alarm. Shortly after, the Treasury Department increased debt buybacks in a move to cap bond yields, further stoking concern that the dollar is set to weaken. As a result, Bitcoin is once again gaining ground, with the token on Monday topping $80,000 for the first time since May. Bitcoin was last trading at $78,045.70, up 21% over the past month. BTC.CM= 1M mountain Bitcoin has risen 21% over the past month. That rally could also benefit Strategy Inc. , the largest corporate holder of bitcoin, and its high-yield perpetual preferred stock, according to Bernstein. "Strategy remains the largest corporate owner of Bitcoin owning ~4% of world's BTC. Strategy's balance sheet has stabilized leading to ~3.9 times annual dividend cash cover and STRC [Short Duration High Yield Credit Stretch perpetual preferred stock] recovering to $97," Chhugani wrote. "If the Bitcoin strength continues with STRC recovering back to the $100, we could see Strategy going kinetic again with Bitcoin purchases." Bernstein has an outperform rating on Strategy and although it lowered its 12-month price target on the stock to $350 from $450, that still implies 176% upside from Tuesday's close. The investment firm's call matches the consensus on Wall Street, where 18 of 20 analysts covering Strategy rate the stock a buy or strong buy, LSEG data shows. Strategy shares are down nearly 20% year to date and 65% lower than where they traded a year ago.