price Bitcoin (BTC 0.41%) Rising 119% in 2024, the bulls have been out in full force recently, making predictions about where the cryptocurrency is headed this year. Recently, Fundstrat’s head of research, Tom Lee, said that the price of one bitcoin could reach $250,000 by the end of 2025.
That would be a staggering 160% increase in the price of Bitcoin if Lee’s predictions prove correct. Of course, no one knows for sure where Bitcoin is headed this year, but there are some reasons why Bitcoin bulls are wrong to be optimistic. Here are some things that could push the cryptocurrency higher this year.
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1. Spot Bitcoin ETFs are increasing interest
Last year, the Securities and Exchange Commission (SEC) approved bitcoin exchange-traded funds (ETFs), which track bitcoin price movements. ETFs can be bought and sold as easily as stocks, making them an easy way for investors to get exposure to Bitcoin without having to purchase the cryptocurrency itself.
There are currently 12 Bitcoin ETFs, and they are two of the most popular iShares Bitcoin Trust and Grayscale Bitcoin Trust ETF. Its widespread availability has helped push the price of Bitcoin higher. All of these ETFs combined have more than $100 billion in assets under management, and CNBC recently said that the Bitcoin spot ETF launch was “one of the most successful ETF launches in history.”
To put the $100 billion invested in spot Bitcoin ETFs into perspective, there is currently $125 billion invested in physical gold ETFs, which have been around for two decades. If its popularity in 2024 is any indication, more investors may be willing to dive into Bitcoin ETF waters this year. If this happens, the price of Bitcoin will likely rise.
2. The possibility of a more favorable organizational climate
Another potential catalyst for the Bitcoin price this year is that President-elect Trump has indicated that his administration may create a favorable regulatory environment for Bitcoin. Trump has appointed venture capitalist David Sachs as his “crypto czar,” and is expected to provide a light regulatory touch for cryptocurrencies.
President-elect Trump has also chosen Paul Atkins, a prominent cryptocurrency supporter, to head the Securities and Exchange Commission. Trump recently said that Atkins “understands that digital assets and other innovations are essential” to his administration’s agenda.
The price of Bitcoin is up more than 40% (as of this writing) since the election, so some of the optimism about a Trump presidency regarding Bitcoin may actually be influenced by its current price. But for some investors who have been waiting on the Bitcoin sidelines, the incoming administration’s stance on the cryptocurrency may be enough to convince them to jump in, which could lead to further Bitcoin gains.
3. Digital assets are gaining popularity with institutional investors
While institutional investors have focused much of their attention on spot Bitcoin ETFs, there is also a growing appetite to invest in other digital assets outside of ETFs as well. An Ernst & Young report found that 60% of institutions that invested in spot cryptocurrencies also invest in cryptocurrencies other than Bitcoin and are likely to allocate more funds to digital assets in 2025.
This suggests that institutional investors are generally becoming more open to cryptocurrencies. This could help the price of Bitcoin because as institutions normalize the idea of buying cryptocurrencies, the average investor will likely view Bitcoin as an unconventional investment.
None of this guarantees that Bitcoin will reach $250,000 in 2025
Even in the most optimistic scenario for Bitcoin, the coin’s price would have to jump 2.5 times from its current price to reach the top of Lee’s forecast. This would be a major achievement, given that the price of Bitcoin has already doubled over the past year.
Most people who made predictions about Bitcoin were wrong at some point (which definitely happened). So, making a decision to buy Bitcoin based solely on someone’s expectations is probably not the best idea.
Instead, it’s worth taking a close look at what’s happening with Bitcoin right now, including the regulatory climate and increasing availability via ETFs, and taking into account the inherent volatility of cryptocurrencies when making your final decision on whether to buy Bitcoin.
Chris Niger has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.
