Analysts at brokerage and research firm Bernstein have raised their price target for Bitcoin to $200,000 from $150,000 by the end of 2025.
This target is based on expectations of unprecedented demand via Bitcoin spot exchange-traded funds managed by some of the world's largest asset managers, such as BlackRock, Fidelity and Franklin Templeton, reaching around $190 billion in assets under management from $60 billion today, Gautam Chhugani and Mahika Sapra wrote in a note to clients.
"We believe regulated ETFs in the US were a watershed moment for crypto that brought structural demand from traditional pools of capital," the analysts wrote. "Approximately $15 billion in net new flows were brought in by ETFs combined. We expect Bitcoin ETFs to account for about 7% of bitcoins in circulation by 2025 and about 15% of bitcoin supply by 2033."
The "limited" bitcoin supply was also a factor noted by analysts following the latest halving event in April, when the block grant reward for miners was reduced from 6.25 BTC to 3.125 BTC. This meant that the new supply of Bitcoins fell from 900 BTC per day to 450 per day following the halving.
"We believe Bitcoin is in a new bull cycle," the analysts said. "Halving presents a unique circumstance, where the natural pressure for miners to sell Bitcoins halves (or even more, as they store more in anticipation), while new catalysts for Bitcoin demand emerge, leading to exponential price movements."
Looking at previous cycles, Bitcoin peaked at around 5 times marginal cost of production in 2017, then bottomed out at 0.8 times marginal cost in 2018, analysts said. In 2021, it rose to around 2.3 times the prevailing marginal cost of production, then bottomed out at 0.7 times marginal cost in 2022, weeding out inefficient and unprofitable miners.
"For the 2024-2027 cycle, we expect Bitcoin to reach 1.5 times Bitcoin's marginal cost of production, implying a cycle peak of $200,000 (or 2.8x appreciation from BTC's current price) by mid-2025," said Chhugani and Sapra.
Bernstein analysts' baseline estimates beyond next year see Bitcoin reaching $500,000 by the end of 2029 and $1 million by 2033.
The largest crypto-currency by market capitalisation currently trades at $67,123, according to The Block's Bitcoin price page.
Analysts at Bernstein have also initiated coverage on business intelligence company and enterprise bitcoin holder MicroStrategy with an Outperform rating, targeting a share price of $2,890 by the end of 2025, up 80%.
"Investors own MSTR to gain active, leveraged exposure to Bitcoin. Investors are willing to pay a premium, given the scarcity of corporate bitcoin investment vehicles such as MSTR on the public listed markets and the scalability of its active investment strategy," the analysts said. "In addition, the leveraged active strategy has outperformed spot Bitcoin - net asset value per share has grown 4x versus spot Bitcoin's 2.4x growth over the past four years since adopting a Bitcoin strategy."
Yesterday, MicroStrategy proposed a $500m convertible senior note issue "to acquire additional bitcoins and for general corporate purposes" with the option for an additional $75m.
The company, which already holds 214,400 BTC - or 1.1% of the outstanding supply valued at more than $14 billion - also announced the redemption of $650 million of its 2025 convertible senior notes.
"Our debt risk analysis suggests low risk for the 2025 convertible and moderate risk for the 2027/2030 convertibles, based on the current Bitcoin price - already in the money. The 2027/2030 convertible debt would require a BTC price above $125,000, at a 10% premium to MSTR stock," added Chhugani and Sapra. "We believe MSTR's long-term convertible debt strategy buys it time to benefit from bitcoin's rise, with limited liquidation risk to its bitcoin balance sheet."
Bernstein analysts' base estimate is that MicroStrategy will own 1.5% of the bitcoin supply by the end of 2025.
