1 Cryptocurrency That Can’t Be Stopped Before It Soars 180% By The End Of 2025, According To 1 Wall Street Analyst

One thing that attracts many cryptocurrency investors is the potential for rapid and stunning price increases.

For example, Bitcoin (BTC -4.07%) grew by 164% in the six months from October 2023 to April 2024. And while the leading cryptocurrency has mostly traded sideways since then, some analysts are predicting another big rise in prices over the next few months.

Analysts at Bernstein recently published a report detailing their expectations for Bitcoin to reach $200,000 by the end of 2025. And that’s a “conservative” forecast, they said. This is approximately 180% higher than the current price.

There are several reasons why Bernstein is so bullish on Bitcoin.

This trend is just beginning

The biggest factor that led to the 164% increase in the price of Bitcoin was the emergence of spot Bitcoin exchange-traded funds (ETFs). In January, the Securities and Exchange Commission approved 11 ETFs that invest directly in Bitcoin. The new ETFs make investing in Bitcoin much easier because you can buy ETFs in a regular brokerage account.

There are currently over $20 billion invested in Bitcoin ETFs. But there is still a long runway ahead. The vast majority of these inflows came from retail investors rather than institutions. Bernstein sees increased adoption by institutional investors on the horizon as they develop strategies to combat the liquidity and volatility risks associated with Bitcoin. Clearer regulations around Bitcoin could also make institutional investors more confident in increasing their exposure to the cryptocurrency.

As more and more institutions move part of their portfolio into Bitcoin, this will stimulate significant demand for the cryptocurrency, causing the price to rise. Ark Invest analysts led by Cathie Wood estimate that the global allocation of 1% by institutions to Bitcoin will push the price to $120,000.

As a result of continued capital inflows and the rise in the price of Bitcoin, Bernstein expects the assets accumulated by Bitcoin ETFs to more than triple by the end of 2025, from about $60 billion to $190 billion.

Bitcoin Economics Demands Higher Prices

Earlier this year, Bitcoin performed another halving, meaning the reward for mining new coins was halved. In fact, this was another reason for the price increase earlier in the year, as Bitcoin has historically risen after each halving. The vestibule has not yet materialized, although that doesn’t mean it won’t happen eventually.

The price of Bitcoin is based on the law of supply and demand. When Bitcoin halves, supply grows more slowly. Additionally, as Bernstein’s report notes, the amount of bitcoin miners sell to the market is also falling. Miners must liquidate at least some of the bitcoins they mine to cover the costs of their operations.

It is important to note that miners will not continue to operate if the marginal cost of mining falls below the value obtained for a very long time. The marginal cost of producing Bitcoin doubles. Bernstein estimates the price will be 1.5 times marginal cost of production between 2024 and 2027. This equates to a price of $200,000 in 2025.

Will Bitcoin Reach $200,000?

The factors laid out by Bernstein’s analysts are good reasons to expect Bitcoin’s price to rise over time. I see supply growth slowing, selling pressure easing, and demand increasing over the next few years as a result of the halving and increased institutional adoption. Whether this will all add up to $200,000 per Bitcoin by the end of next year remains to be seen, but Bernstein is likely at least accurate in the direction.

Adam Levy has positions in Bitcoin. The Motley Fool has positions and recommends Bitcoin. The Motley Fool has a disclosure policy.