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Analyst: the last entry point before Bitcoin’s sovereign shift
The recent decline in Bitcoin may be creating a rare long-term entry opportunity, with Bernstein arguing that the current pullback could be the “last opportunity before Bitcoin rises as a sovereign asset.”
Gautam Chhugani, an analyst at the firm, stated that the past two years have marked an institutional phase for digital assets, driven by the rapid growth of Bitcoin exchange-traded funds (ETFs) and increasing demand from corporate treasuries.
Bitcoin ETFs reached $165 billion in assets in just 21 months — the fastest growth in ETF history — while Strategy alone purchased more than $48 billion worth of Bitcoin over the past two years.
Despite this structural demand, Bitcoin has lagged behind gold over the past year, raising doubts about the “digital gold” narrative. Chhugani noted that Bitcoin’s market capitalization has fallen to roughly 4% of gold’s market cap, close to the lower bound of its historical range, as central banks sharply increased gold purchases, particularly in China and India.
However, the macroeconomic and political backdrop in the United States may ultimately change this balance, the analyst said, highlighting the passage of the GENIUS Act to legitimize U.S. dollar stablecoins and the creation of a U.S. Strategic Bitcoin Reserve under President Donald Trump’s cryptocurrency executive order.
With Kevin Warsh appointed as Chair of the Federal Reserve, Chhugani argues there is a “non-zero probability” that the U.S. may more closely align itself with Bitcoin as an alternative sovereign asset — potentially even revaluing or partially replacing gold reserves.
“We understand this sounds unlikely, but we believe the current geopolitical game theory requires the U.S. to counter the rise of gold as an alternative to U.S. Treasuries in central bank reserves,” he added.
If Bitcoin’s underperformance relative to gold continues, the administration will likely intervene with political support, including accelerating the passage of the digital asset market structure bill known as the Clarity Act, Chhugani said.
“We simply do not see a passive U.S. government if digital asset markets continue to slide,” he wrote.
Tactically, the analyst acknowledged that cryptocurrencies may still be in a short-term bearish phase, but expects a reversal during 2026, potentially with Bitcoin stabilizing near the previous cycle highs around $60,000.
“We expect the reversal to be swift and to establish a new strong higher base for what could become the most significant cycle for Bitcoin and potentially lay the groundwork for a sovereign Bitcoin cycle,” he said.
Institutional flows, Chhugani noted, remain resilient, with no signs of leverage-driven capitulation seen in past cycles.
See also: "Ki Young Ju made a forecast for Bitcoin’s price in the near term"
