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Bernstein Research, the prestigious research arm of global asset manager AllianceBernstein, expects the price of bitcoin to reach $200,000 by the end of 2025. The firm, which manages $791 billion in assets as of August 2024, describes this forecast as “conservative” in Its latest reports. The 160-page “Black Book” about Bitcoin.
Why BTC will reach $200,000 in 2025
Bernstein a reportTitled “From Currency to Computation: A Guide to Investing in Bitcoin,” it delves into the multi-faceted dynamics driving Bitcoin’s rise. The company emphasizes the surge in institutional adoption, the thriving market for Bitcoin exchange-traded funds (ETFs), and the evolving role of Bitcoin miners in both the cryptocurrency and artificial intelligence (AI) sectors.
“If you’re a Bitcoin skeptic… Supply may be limited, a ‘store of value’ digital asset isn’t a bad thing in a world where US debt is reaching new highs ($35 trillion now) and inflation threats still loom. If you like gold here, you should like Bitcoin even more. He writes Gautam Chogani, Managing Director and Senior Analyst at Bernstein.
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The report highlights a significant shift in institutional investment patterns. According to Bernstein, global asset managers now hold nearly $60 billion worth of Bitcoin and Ethereum ETFs, a five-fold increase from $12 billion in September 2022. The firm describes the launch of these ETFs as “the most successful in the history of ETFs.” stock market”. “, pointing to inflows of $18.5 billion year-to-date since its introduction in January.
“By the end of 2024, we expect Wall Street to replace Satoshi as the best Bitcoin wallet,” the report reads. Bernstein attributes this increase to the logistical challenges of self-custodialism that retail investors face. “As institutional players flock to Bitcoin, ETFs have proven to be an entry point for large-scale investment in the digital asset,” the company notes.
Bernstein’s bullish stance on Bitcoin is based on his analysis of market trends and institutional behavior. The price of Bitcoin has already risen 120% over the past 12 months, with the market cap swelling to $1.3 trillion.
“As institutional adoption accelerates, we expect Bitcoin to triple from its current levels,” Bernstein predicted. The company forecasts that Bitcoin’s market value could expand to more than $3 trillion by the end of 2025, driven by increasing allocations from wealth management platforms, pension funds and registered investment advisors.
The report also notes that larger financial institutions will play a more dominant role as the market matures. “In our view, this new institutional era could push Bitcoin to a high of $200,000 by the end of 2025,” the analysts wrote, stressing that the outlook is “conservative” given the current trajectory of institutional participation.
Bitcoin Treasury and Mining
Another focal point of Bernstein’s report is the growing adoption of Bitcoin as a corporate treasury asset. The company highlights MicroStrategy Incorporated (NASDAQ: MSTR) as a leading example. Led by CEO Michael Saylor, MicroStrategy has allocated more than 99% of its cash holdings to Bitcoin, and owns approximately 1.3% of the total supply of Bitcoin.
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“We view MicroStrategy as an active strategy for Bitcoin stocks,” Bernstein said, noting that the company’s shares have provided superior returns compared to holding Bitcoin directly or via ETFs.
Bernstein’s report also sheds light on consolidation trends within the Bitcoin mining industry. Major players like Riot Platforms (NASDAQ: RIOT), CleanSpark (NASDAQ: CLSK), and Marathon Digital Holdings are snapping up smaller miners, creating an industry dominated by industrial-scale operations.
“Large U.S. Bitcoin miners are consolidating their stake and becoming energy infrastructure players,” the report notes. “We expect Riot, CleanSpark and Marathon to boost the Bitcoin mining industry.” Bernstein predicts that leading miners will control 30% of Bitcoin’s total hash rate by 2025.
Analysts are also exploring synergies between Bitcoin mining and AI infrastructure. Bitcoin miners are emerging as attractive partners for GPU cloud providers, offering access to gigawatt-scale power and reducing the “time to market” for activating AI data centers.
“Miners represent an energy arbitrage opportunity, trading at $2 million to $4 million per megawatt, compared to $30 million to $50 million per megawatt for legacy data centers,” Bernstein notes. Companies like Core Scientific and Iris Energy are taking advantage of this by developing AI data centers alongside their Bitcoin mining operations.
“Bitcoin miners are evolving into essential partners for AI data centers as they take advantage of excess power capacity and provide efficient solutions for high-performance computing,” says Bernstein. This convergence not only diversifies revenue streams for miners, but also enhances the sustainability and scalability of AI infrastructures.
At press time, Bitcoin was trading at $67,162.
Featured image created with DALL.E, a chart from TradingView.com