Tom Lee is head of research at Fundstrat Global Advisors. He was well anticipating the stock market rally that lifted it S&P 500 out of a bear market last year. Specifically, when Wall Street's median price implies a 6% rise in 2023, Lee said the S&P 500 would gain 24%.
Also, the S&P 500 has advanced 24% over the past year as cooling inflation and expectations of interest rate cuts have given investors reason to keep going. Recently, Lee predicted that the S&P 500 will reach 6,000 by 2024, and he predicted. Bitcoin(CRYPTO: BTC) it will cost $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 equate to nearly a 150% return on its current value of around $100,000.
Lee earlier this year outlined his three-point investment thesis for Bitcoin during an interview with CNBC: First, he said, its demand is still rising due to the growth of Bitcoin exchange-traded funds (ETFs); secondly, the supply of newly minted Bitcoin has decreased due to the reduction of the recent block funding portion; and third, interest rates are falling, which is generally good for risky assets.
Spot Bitcoin ETFs: After the Securities and Exchange Commission gave its approval, 11 Bitcoin ETFs hit the US market in January 2024. Those funds allow investors to add Bitcoin to their existing trading accounts, which is easier (and often cheaper) than keeping a -separate account with cryptocurrency. exchange. Therefore, Bitcoin ETFs should continue to increase demand for the crypto among retail and institutional investors.
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.” That's especially good news for those who own Bitcoin because institutional investors have $120 trillion in assets under management, and the price of Bitcoin should go higher as they allocate more money.
Analysts have declared the Bitcoin ETF location as the most successful ETF launch in history. But the iShares Bitcoin Trust with BlackRock has been particularly impressive. It reached $10 billion in assets faster than any ETF on record, according to the report The Wall Street Journal. It now has $35 billion in revenue, more than the other 10 Bitcoin ETFs combined.
Bitcoin reduction events: Block rewards are financial incentives that include transaction fees and block grants (newly minted Bitcoin). Block rewards are paid to crypto miners to confirm transactions, but the subsidy is reduced by 50% each time 210,000 blocks are added to the Bitcoin blockchain. That happens about once every four years.
These halving events are part of a system that limits the total supply of Bitcoin to 21 million coins, and reduces selling pressure by limiting the amount of newly minted coins that miners will be able to sell. The last part happened in April, when Bitcoin traded at $64,000. But historically, the Bitcoin price chart has usually peaked one to two years after a halving. For example, in November 2021, Bitcoin reached 690% more than its value in the third split, which happened in May 2020.
Interest rate reduction: In September, the Federal Reserve began lowering the federal funds rate, the benchmark interest rate that influences most other rates throughout the economy. Bitcoin has historically done well in low-value environments, perhaps because investors are more comfortable with riskier assets where borrowing is less restricted. That said, Bitcoin is a 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 volatile asset. To achieve that, Lee believes that Bitcoin can see a reversal at the beginning of 2025, so that its price drops to $ 60,000. After that, however, he predicts it will rise to $250,000 before the end of the year.
Also, Lee pointed out that Bitcoin typically makes its biggest gains each year during a single 10-day period. Crypto investors who miss out on the benefits of those few days can often get negative returns for the rest of the year. In other words, it would be a mistake to buy Bitcoin without real belief. Anyone who might be afraid of exiting assets during a major downturn should avoid Bitcoin.
In conclusion, investors should remember that no one knows the future. Lee has made scientific calls in the past, and he may be right about Bitcoin hitting $250,000 by 2025. But investors should not invest a single cent in cryptocurrency if they are not prepared to lose it.
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The Shocking Bitcoin Prediction for 2025 From a Wall Street Analyst Who Predicted Its Rise to $100,000 in 2024 was originally published by The Motley Fool.
