Bitcoin
Is Bitcoin on Track to Hit $100,000 by 2025?
Investors are focused on this important price target.
Bitcoin (BTC -0.88%) has had an interesting year. From the start of 2024 to its all-time high on March 14, Bitcoin jumped 73%. But it’s been a pretty shaky four months since then. Bitcoin has had a good run in the past few weeks, but it’s currently down 12% from its peak price (on July 18).
The bulls are hoping that a breakout can happen. With that said, it is the world’s leading cryptocurrency on track to hit $100,000 sometime in 2025, setting a new record and breaking the psychologically important six-figure mark? Let’s see if this 52% gain (from today’s price) is a possibility.
Multiple catalysts
Less than two years ago, in late 2022, Bitcoin’s price was below $16,000. That year was a tough one for risk assets, a category that cryptocurrencies and stocks fall into. But it’s been remarkable to see Bitcoin’s rise since then.
The leading digital asset can thank a few recent catalysts for its performance. The most notable this year was the approval of the Securities and Exchange Commission (SEC) in spot bitcoin exchange-traded funds (ETFs). This highly anticipated event essentially legitimized Bitcoin on both Wall Street and Washington. And it opened the floodgates for much more capital to flow into the asset in a convenient and compliant manner.
Another catalyst was the April halving which cut the new supply of Bitcoin entering the market in half. This happens roughly every four years as it reinforces Bitcoin’s fixed issuance schedule. The digital asset typically experiences a massive bull run in the months that follow.
I believe that broader acceptance of Bitcoin is another step in the right direction. For example, during this year’s election cycle, politicians are starting to make Bitcoin more specifically, and crypto more broadly, a major issue.
The possibility of interest rate cuts could also boost Bitcoin’s price. This is because investors will start accepting more risk in order to earn a higher return. And given Bitcoin’s impressive track record, demand for it could increase if the Federal Reserve becomes more accommodative.
Previous cycles
I noted above that after a halving event occurs, the price of Bitcoin typically rises rapidly in the 12 to 18 months or so afterward. Of course, it’s not surprising that as the asset has matured, this bull run hasn’t been as spectacular as previous ones.
For example, in the 17 months following the July 2016 halving, the price soared 2,890%. And in the 18 months following the May 2020 halving, the price of Bitcoin soared nearly eightfold.
Therefore, it’s safe to assume that Bitcoin’s price will increase at a more moderate pace. Seeing it increase by 52% by the end of next year, however, seems like an entirely realistic scenario that fits with the trend of smoothing post-halving returns.
Keep this in mind
While I believe it’s entirely possible that Bitcoin will hit $100,000 next year, it’s important to understand that short-term projections are often wrong. Worse still, they provide a false sense of accuracy that can ultimately result in poor investment decisions. Consequently, you shouldn’t buy Bitcoin with a 12- or 24-month outlook, expecting a big gain in 2025. A healthier investment horizon would be several years into the future.
Instead, it’s always better to keep a long-term mindset. This will force you to focus on what matters, like the fact that Bitcoin has a hard supply cap and that it is a decentralized digital currency not controlled by any single entity. If these characteristics resonate with you, you can buy this cryptocurrency with a time horizon spanning at least five years.
Neil Patel and its clients have no position in any of the stocks mentioned. The Motley Fool holds positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.