Bitcoin, the popular cryptocurrency, is expected to reach an unprecedented value of $200,000 by 2025, according to a recent report from global investment research and asset management firm Bernstein. The projected increase in value is attributed to the growing adoption of cryptocurrency by institutional investors.
Bernstein’s analysts stated in the report that the market momentum of bitcoin is shifting, signaling the beginning of a new cycle. One of the key factors driving this anticipated growth is the involvement of institutional investors, particularly with the introduction of U.S.-regulated bitcoin exchange-traded funds (ETFs). The report highlighted that ten global asset managers currently hold $60 billion worth of bitcoin through regulated ETFs, a significant increase from $12 billion in September 2022. The analysts predict that by the end of 2024, Wall Street will replace Satoshi Nakamoto, the pseudonymous creator of bitcoin, as the top holder of the cryptocurrency.
The crypto industry remains optimistic about the future of bitcoin. So far this year, the value of bitcoin has increased by nearly 60%. Bernstein attributes this growth to various macroeconomic factors, such as the U.S. election, China’s $284 billion economic stimulus, and potential interest rate cuts, which have encouraged investors to support bitcoin’s rally.
The launch of U.S.-regulated ETFs was considered a significant milestone that contributed to bitcoin’s value reaching $73,700 earlier this year, according to Bernstein. The report also noted that bitcoin ETFs managed by firms like Blackrock have attracted substantial investments since their inception. Bernstein predicts that by the end of 2025, the total assets under management by bitcoin ETF issuers will reach $190 billion, accounting for approximately 7% of all bitcoin in circulation.
Apart from institutional adoption, timing is identified as another crucial factor in the forecast. The analysts point to the halving event, which reduces miners’ rewards, as a major driver of bitcoin’s price surge. Historical data shows that halving events have typically led to price increases, with a year of “irrational market exuberance” followed by a cooling period in the third year. Based on this pattern, 2025 is expected to be the year for a new all-time high.
Bernstein’s bullish $200,000 prediction is based on bitcoin’s marginal cost of production, which refers to the expense incurred by the least efficient miner. The report explains that in previous cycles, bitcoin’s price has been significantly higher than its marginal cost. For the upcoming cycle, Bernstein expects bitcoin’s price to be around 1.5 times the current marginal cost, further supporting their optimistic forecast.
