Bitcoin

Prediction: Bitcoin will reach $100,000 in 2025

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The world’s main cryptocurrency still has a lot of potential for appreciation.

Bitcoinin (Bitcoin 0.43%) the price has more than doubled to about $63,000 in the last 12 months. This rally was primarily driven by the approval of the first spot-priced Bitcoin ETFs in January, the Bitcoin halving in April, and market expectations of lower interest rates.

These catalysts have led some investors to make extremely optimistic predictions regarding the future of Bitcoin. Cathie Wood of Ark Invest believes its price could reach $3.8 million by 2030, venture capitalist Chamath Palihapitiya sees a price of $1 million by 2040-2042, and Fidelity says its price could reach a staggering $1 billion by 2028-2030.

Image source: Getty Images.

It’s impossible to say whether Bitcoin will come close to these estimates, so most investors should focus on its realistic upside potential rather than these lofty price targets. I think Bitcoin has a viable path to reaching $100,000 by the end of 2025, which still makes it a good bet for investors who can tolerate short-term volatility.

Bitcoin would only need to replicate its average annual gains

From January 1, 2014 to January 1, 2024, the price of Bitcoin rose from $771.40 to $43,835.62. This represented a compound annual growth rate (CAGR) of 50% over 10 years. A 50% gain this year would push Bitcoin’s price to $65,800 by January 1, 2025, while another 50% gain would take its price to $98,700 by January 1, 2026. So if Bitcoin just replicates its average annual growth rate over the past decade, its price could approach US$100,000 by the end of 2025.

Another factor is Bitcoin’s performance after each halving, which reduces the rewards for mining the cryptocurrency every four years. Let’s look at the price of Bitcoin after each of the three halvings that occurred in 2012, 2016, and 2020.

Halving date

Price at the time of halving

After the maximum price of the year

2012

$13

$1,152

2016

$664

$17,760

2020

$9,734

$67,549

Data source: Bitpay.

Bitcoin’s post-halving returns are declining, but this trajectory suggests that its price could still rise significantly after the last halving, which occurred on April 19, 2024. Bitcoin’s price closed at $63,844 that day. It is still hovering around that level at the time of this writing, but historical data suggests it could easily climb above $100,000 by 2025.

Institutional Buying Could Turn the Tide

Bitcoin bulls believe institutional purchases will drive its price to new all-time highs. According to a recent EY-Parthenon survey, 76% of institutional investors still allocated less than 5% of their portfolios to Bitcoin and other digital assets.

Cathie Wood has repeatedly stated that if institutional investors just added “a little more than 5% of their portfolios to Bitcoin,” its price would soar into the millions. Wood believes that recent Bitcoin approvals Spot Price ETFs – which make it easier for institutional investors to buy cryptocurrency – will fuel this trend.

The Federal Reserve won’t cut interest rates anytime soon, but it also said it wouldn’t raise rates in the near future. This stability could lead more institutional investors to bet on Bitcoin and more speculative investments this year.

However, more companies could accept Bitcoin as a form of payment, while more inflation-ravaged countries could follow El Salvador’s example and adopt it as their national currency. This trend would reinforce its reputation as a safe-haven asset and make it more comparable to gold, silver and other precious metals. The US Securities and Exchange Commission supports this view: it is repeatedly said that Bitcoin is the only cryptocurrency that is a commodity rather than a security.

But investors should prepare for some volatile swings

I believe Bitcoin price has a clear path to reaching $100,000 by the end of 2025, but will likely endure some volatile swings before reaching that goal. Therefore, investors should evaluate short-term risks rather than blindly following the bulls.

Leo Sun has no position in any of the stocks mentioned. The Motley Fool has positions and recommends Bitcoin. The motley fool has a disclosure policy.

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