Tom Lee is head of research at Fundstrat Global Advisors. He rightly anticipated the stock market rally that brought the price up S&P500 outside bear market territory last year. When Wall Street’s average price target implied a 6% upside for 2023, Lee said the S&P 500 would rise 24%.
Lo and behold, the S&P 500 advanced 24% last year as cooling inflation and expectations of rate cuts gave investors reason to be optimistic. More recently, Lee predicted that the S&P 500 would reach 6,000 by 2024. Bitcoin(CRYPTO: BTC) would surpass $100,000 this year. He was right on both counts.
Now Lee is back with a shocking prediction for 2025: Bitcoin could reach $250,000. That would represent a gain of about 150% from the current price of about $100,000.
Lee outlined his three-point investment thesis for Bitcoin during an interview with CNBC earlier this year: First, he said, demand for it is still increasing due to the growth of spot Bitcoin exchange-traded funds (ETFs); second, the supply of newly minted Bitcoin has shrunk due to the recent halving of block subsidies; and third, interest rates are falling, which is generally good for risky investments.
Discover Bitcoin ETFs: After the Securities and Exchange Commission gave its approval, 11 spot Bitcoin ETFs hit the US markets in January 2024. These funds allow investors to add Bitcoin to their existing investment accounts, which is easier (and often cheaper) than maintaining a separate cryptocurrency account. stock exchange. Consequently, spot Bitcoin ETFs should continue to drive demand for the crypto among retail and institutional investors.
Matt Hougan, chief investment officer at crypto index fund manager Bitwise Asset Management, recently wrote: “Bitcoin ETFs are being adopted by institutions at the fastest pace of any ETF in history.” That’s especially good news for those who own Bitcoin, because institutional investors have $120 trillion in assets under management, and Bitcoin’s price should rise higher as they allocate more money to it.
Analysts have declared spot Bitcoin ETFs among the most successful ETF launches in history. But the iShares Bitcoin Trust Through BlackRock has been particularly impressive. According to figures, it reached $10 billion in assets faster than any ETF The Wall Street Journal. It now has $35 billion in net inflows, which is more than the other 10 spot Bitcoin ETFs combined.
Bitcoin halving events: Block rewards are financial incentives that combine transaction fees with block subsidies (newly minted Bitcoin). Block rewards are paid to crypto miners for validating transactions, but the subsidies are reduced by 50% every time 210,000 blocks are added to the Bitcoin blockchain. That happens about once every four years.
These halving events are part of the system that limits Bitcoin’s final total supply to 21 million coins, and they reduce selling pressure by limiting the amount of newly minted currency that miners can sell. The last halving took place in April, when Bitcoin traded at $64,000. But historically, Bitcoin’s price chart has usually peaked one to two years after a halving. For example, in November 2021, Bitcoin peaked at 690% above its price during the third halving, which took place in May 2020.
Interest rate reductions: In September, the Federal Reserve began cutting the federal funds rate, a benchmark rate that influences most other interest rates in the economy. Bitcoin has historically performed best in low interest rate environments, perhaps because investors are more comfortable with risky assets when lending is less restrictive. That said, Bitcoin is a relatively new asset class, so the amount of historical data about it is limited.
Image source: Getty Images.
In a recent interview with financier Anthony Scaramucci, Lee described Bitcoin as a hypervolatile asset. Therefore, Lee believes that Bitcoin could experience a pullback in early 2025, causing its price to drop to $60,000. After that, however, he predicts the amount will rise to $250,000 before the end of the year.
Lee also pointed out that Bitcoin typically makes most of its annual gains within a ten-day period. Crypto investors who miss out on those few days’ gains would often end up with negative returns for the entire year. In other words, it would be a mistake to buy Bitcoin without real conviction. Anyone who is likely to become fearful of these assets due to a period of steep declines should avoid Bitcoin.
Finally, investors should keep in mind that no one knows the future. Lee has been prescient in the past, and he may be right when he says Bitcoin will reach $250,000 by 2025. But investors shouldn’t put a dime into the cryptocurrency if they aren’t willing to lose it.
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Trevor Jennevine has no positions in any of the stocks mentioned. The Motley Fool holds and recommends positions in Bitcoin. The Motley Fool has a disclosure policy.
A Shocking Bitcoin Prediction for 2025 from the Wall Street Analyst Who Predicted the Rise to $100,000 in 2024 was originally published by The Motley Fool
