Bitcoin Will Hit $100,000 by 2025

Despite being a highly volatile asset, there’s no denying what a great investment Bitcoin (CRYPTO:BTC) is. In the last five years alone, the world’s largest digital asset has surged 504%, outperforming the Nasdaq Composite Index by a large margin.

The leading cryptocurrency is currently trading at around $57,000 (as of August 6), which is around 23% off its peak price in March of this year. Despite the recent volatility, optimistic investors are focused on a new milestone in the not-so-distant future: the six-figure mark.

It is quite reasonable to think that Bitcoin could reach a price of $100,000 by the end of 2025. Here is why.

Focus on the short term

You often hear traders talk about catalysts, or big events that can drive price action. Bitcoin has experienced many of these this year, and there could be more on the horizon.

Shortly after the calendar turned to 2024, the Securities and Exchange Commission (SEC) approved the trading of Bitcoin spot exchange-traded funds. Gaining exposure to Bitcoin’s price in a convenient, accessible, and regulatory-friendly manner has already brought a lot of capital to the asset, and that trend should continue.

In April, the Bitcoin blockchain went through a halving, a process known as a halving, where the rate of new supply is cut in half. This happens roughly every four years. And in the 12 to 18 months since, Bitcoin’s price has historically seen a major rally. It’s been less than four months since the last halving, so there could be strong returns ahead.

Another ongoing catalyst is a more favorable environment for Bitcoin adoption. Businesses are creating a variety of financial services that make it easier to use crypto. And politicians, particularly Donald Trump, are openly voicing their support for Bitcoin. These are all encouraging trends.

I will also point out the much anticipated move by the Federal Reserve to potentially start lowering interest rates later this year. Lower rates encourage investors to take more risk (perhaps with borrowed money) in order to get better returns. This could lead to more capital flowing into Bitcoin.

Consider the bigger picture

While these catalysts could continue to benefit Bitcoin in the near term, investors should not forget what truly makes this asset special: its fixed supply cap of 21 million coins. Bitcoin stands out when compared to the ever-increasing supplies of other cryptocurrencies and fiat currencies, especially the US dollar.

This leads me to believe that investor education is a long-term catalyst to keep in mind. As more people realize that the US is on an unsustainable path with its fiscal deficits and alarming debt burden, it becomes clear why owning Bitcoin is so appealing. A global, decentralized, superior monetary network and one that can increase financial freedom.

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It is difficult to make accurate predictions

Given these active price-boosting catalysts, Bitcoin’s price could rise by more than 50% in the next 16 months, reaching $100,000 or more. But always remember to take predictions with a pinch of salt. The many variables at play can have a big impact on real-world outcomes.

Of course, like any other financial asset, Bitcoin faces its fair share of risks. Perhaps no risk is more pressing than the possibility of governments banning it, especially in the U.S. Making it illegal to mine or own Bitcoin could seriously reduce demand, which would drive down the price. But given how much of a political tool this cryptocurrency has become and how many powerful business people own it, I don’t think a ban will happen.

Regardless of what happens in the next year or two, investors should only buy Bitcoin if they plan to hold it for at least the next five to 10 years. Having this long-term mindset is critical.

Should you invest $1,000 in Bitcoin right now?

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Neil Patel and his clients have no position in any of the stocks mentioned. The Motley Fool has a position in Bitcoin and recommends Bitcoin. The Motley Fool has a disclosure policy.

Prediction: Bitcoin Will Reach $100,000 by 2025 was originally published by The Motley Fool