1 Unstoppable Cryptocurrency to Buy Before It Surges 180% by the End of 2025, According to a Wall Street Analyst

Something that attracts many investors cryptocurrency is the potential for rapid and staggering price increases.

For example, Bitcoin (BTC -4.07%) rose 164% in the six months from October 2023 to April 2024. And while the leading cryptocurrency has traded largely sideways since then, some analysts see another big price increase coming in the coming months.

Bernstein analysts recently released a report outlining their expectations that Bitcoin will reach $200,000 by the end of 2025. And that is a ‘conservative’ view, they said. That’s about 180% higher than the current price.

There are a few reasons why Bernstein is so optimistic about Bitcoin.

This trend is just getting started

The biggest factor that caused Bitcoin’s 164% price increase was the introduction 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 it much easier to invest in Bitcoin, because you can buy an ETF in a regular investment account.

More than $20 billion has flowed into Bitcoin ETFs to date. But there’s still a long runway ahead. The vast majority of this inflow comes from private investors and not from institutions. Bernstein sees greater adoption by institutional investors on the horizon as they develop strategies to deal with the liquidity and volatility risks associated with Bitcoin. Clearer regulations around Bitcoin could also give institutional investors more confidence in increasing their exposure to the cryptocurrency.

As more and more institutions shift part of their portfolios to Bitcoin, this will drive significant demand for the cryptocurrency, driving its price higher. Analysts at Ark Invest, led by Cathie HoutAccording to estimates, a global allocation of 1% by institutions to Bitcoin would increase the price to $120,000.

Due to continued inflows and the rise in Bitcoin’s price, Bernstein expects the assets accumulated by Bitcoin ETFs to more than triple from approximately $60 billion to $190 billion by the end of 2025.

Bitcoin’s economics require higher prices

Earlier this year, Bitcoin performed another one halvethat’s when the rewards for mining new coins are halved. In fact, that was another reason for the price surge at the start of the year, as Bitcoin has historically risen higher after each halving. The run-up has yet to materialize, but that doesn’t mean it won’t happen eventually.

The price of Bitcoin is based on the law of supply and demand. When Bitcoin undergoes a halving, its supply grows more slowly. Furthermore, the Bernstein report notes that the number of Bitcoin is miners sales on the market also decrease. Miners must liquidate at least some of the Bitcoin they mine to cover the costs of their operations.

Importantly, miners will not continue operating if the marginal cost of mining remains below the received value for very long. The marginal cost of producing Bitcoin increases with a halving. Bernstein estimates that the price will reflect one and a half times the marginal cost of production between 2024 and 2027. That translates to a price of $200,000 in 2025.

Will Bitcoin Reach $200,000?

The factors outlined by Bernstein’s analysts are solid reasons to expect Bitcoin’s price to rise over time. I see supply growth slowing, selling pressure easing and demand increasing in the coming years due to the halving and increased institutional adoption. Whether it all adds up to $200,000 per Bitcoin by the end of next year remains to be seen, but Bernstein is likely to be at least directionally accurate.

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