Tom Lee is the head of research at Fundstrat Global Advisors. He really expected the stock market rally to pick up S&P 500 out of bear market territory last year. Specifically, while Wall Street’s average price target was 6% up by 2023, Lee said the S&P 500 would gain 24%.
Lo and behold, the S&P 500 rose 24% last year as cooling inflation and the prospect of interest rate cuts gave investors reasons to be entrepreneurial. Recently, Lee predicted that the S&P 500 would hit 6,000 in 2024, and he predicted. Bitcoin(CRYPTO: BTC) it would top $100,000 this year. He was right about everything.
Now, Lee is back with a scary prediction for 2025: Bitcoin could hit $250,000. That would amount to about a 150% gain from the current price of $150.
Lee earlier this year described his three-point investment theory Bitcoin during an interview with CNBC: First, he said, demand is still rising due to the growth of Bitcoin exchange-traded funds (ETFs); second, the supply of Bitcoin has recently decreased due to the halving of its block grant; and third, interest rates are falling, which is usually good for risky assets.
Spot Bitcoin ETFs: After the Securities and Exchange Commission gave its approval, 11 spot Bitcoin ETFs hit the US market in January 2024. Those funds let investors add their Bitcoin to their existing broker accounts, which is easier (and often less expensive) than maintaining separate accounts with cryptocurrency. exchange. As a result, the Bitcoin ETFs space should continue to increase the demand for the crypto among investors and institutions.
Indeed, 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 rate of any ETF in history.” This is very good news for those who hold Bitcoin because institutional investors have $120,000 in assets under management, and the price of Bitcoin should rise as they allocate more money to it.
Analysts have declared the position of Bitcoin ETFs to be the most successful ETF launch in history. But they iShares Bitcoin Trust by BlackRock it’s been a lot of fun. It hit $10 billion in assets faster than any listed ETF, according to the report The Wall Street Journal. It now has $35 billion in net inflows, which is more than the other 10 Bitcoin ETFs combined.
Bitcoin half events: Block financial incentives include transaction fees and block subsidies (recently coined Bitcoin). Block rewards are paid to crypto miners to confirm transactions, but the benefit is reduced by 50% every time 210,000 blocks are added to the Bitcoin blockchain. That happens once every four years.
These halving events are part of a system that limits Bitcoin’s final supply to 21 million coins, and reduces trading pressure by limiting the number of new coins that miners will be able to sell. The last session happened in April, when Bitcoin traded at $64,000. But historically, Bitcoin’s price chart has generally risen two to two years after the average. For example, in November 2021, Bitcoin rose at 690% above its price on the third quarter, which happened in May 2020.
Interest reduction: In September, the Federal Reserve began lowering the federal funds rate, the interest rate that influences other rates in the economy. Bitcoin has always performed best in low-risk environments, perhaps because investors are more comfortable with risky assets or unregulated lending. That said, Bitcoin is a new asset class, so the amount of history about it is limited.
Image source: Getty Images.
In a recent interview with financier Anthony Scaramucci, Lee described Bitcoin as a hyper-volatile asset. For this to happen, Lee believes that Bitcoin could see a pullback in early 2025, so that its price falls to $60. After that, however, he predicts that it will increase to $250,000 before the end of the year.
Also, Lee said that Bitcoin usually makes most of its annual gains within a single day of 10 days. Crypto traders who lose these few days’ gains often end up with negative returns for the rest of the year. In other words, it would be a mistake to buy Bitcoin without real conviction. Anyone who might be afraid to get out of that asset at a time of deep decline should avoid Bitcoin.
In closing, traders should remember that no one knows the future. Lee has made prescient calls in the past, and he may be right about Bitcoin hitting $250,000 in 2025. But investors should not invest a single cent in cryptocurrency if they are not prepared to lose it.
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Trevor Jennewine 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.
The Shocking Bitcoin Forecast for 2025 From a Wall Street Analyst Who Predicted Its Rise to $100,000 in 2024 was first published by The Motley Fool.
