Why Bitcoin Could Surge to $200,000
Bitcoin fans are hoping that the world’s most valuable cryptocurrency will keep climbing. But even some crypto enthusiasts admit that Bitcoin continues to be incredibly volatile. It’s not digital gold just yet.
Bitcoin was initially developed primarily to be a form of payment that isn’t controlled or distributed by a central bank. Almost like barter. While financial institutions have traditionally been necessary to verify that a payment has been processed successfully, Bitcoin accomplishes this securely, without that central authority. The popularity, and investment, in Bitcoin may be dependent on the passion for this discrete form of payment. Although folks may not have complete confidence in the stability of Bitcoin, they are far from ambivalent regarding its underlying objective.
However, Bitcoin itself has failed in its stated objectives and has become a speculative investment. This is puzzling. It has no intrinsic value and is not backed by anything. Bitcoin devotees will tell you that, like gold, its value comes from its scarcity—Bitcoin’s computer algorithm mandates a fixed cap of 21 million digital coins.
Bitcoin surged from about $70,000 just before the November presidential election to a record high of more than $100,000, largely due to expectations that President-elect Donald Trump and his regulatory regime will adopt far-friendlier policies related to crypto than the outgoing Biden administration.
“Trump’s election and implications that will have for regulations and policy is a catalyst for Bitcoin,” said Seth Hertlein, global head of policy with Ledger, a digital asset security firm, noting that changes in DC could be like “jet fuel” for crypto. “Prices could go higher…a lot higher” .
That may wind up happening. But experts expect more volatility for Bitcoin along the way.
For one, there are questions about how many willing buyers are out there beyond Michael Saylor’s software firm MicroStrategy which recently disclosed plans to raise $2 billion to purchase even more Bitcoin.
The global markets strategy team at J.P. Morgan Securities wrote in a report Monday that MicroStrategy bought about $22 billion of the $78 billion in Bitcoin and crypto funds that were purchased in 2024.
“In other words, MicroStrategy’s bitcoin purchases alone accounted for 28% of last year’s record capital inflow into crypto markets,” the J.P. Morgan strategists pointed out. Bitcoins ultimate success, however may require more mass appeal than large investments.
David Foley, co-managing partner of the Bitcoin Opportunity Fund, which invests in Bitcoin as well as MicroStrategy and other public and private companies that have ties to the cryptocurrency, said in an interview with Barron’s that there should be widespread interest from large institutional investors as well as more businesses looking to add Bitcoin to their corporate treasuries.
“You’re seeing a lot of small companies buying Bitcoin but not as many whales yet like MicroStrategy,” he said. “But bigger companies may take steps toward investing in Bitcoin.”
Larger firms may be waiting for Bitcoin to become less volatile, though. Foley pointed out that Bitcoin is still more highly correlated with riskier tech stocks than it is with gold.
Along those lines, Foley said he could see Bitcoin tumbling back to $70,000 this year if “the Trump halo fades” due to concerns about tariffs and if there is broader market volatility that hurts the Nasdaq
Excerpts taken from: Barrons.com
