The launch of the new spot Bitcoin (BTC +0.35%) exchange-traded funds (ETFs) was a watershed moment in the history of crypto. Nearly 15 years after it originally launched, Bitcoin is now readily available to the average investor and could finally be on the cusp of going mainstream.
So what will happen with Bitcoin over the next three years? Let's take a closer look at the potential impact of the new spot Bitcoin ETFs.
1% Bitcoin
As a result of the new spot Bitcoin ETFs, both retail and institutional investors will likely decide to allocate at least 1% of their portfolios to Bitcoin. That represents a sea change in thinking because, until recently, Wall Street did not view Bitcoin as a stand-alone asset class. But three years from now, most people will probably think of crypto the same way they think about other alternative asset classes, such as real estate or private equity. Bitcoin will simply be a way to diversify a portfolio and boost overall returns.
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Most likely, institutional investors will lead the way. And that could lead to a tsunami of new money flowing into Bitcoin. For example, BlackRock is the largest asset manager in the world, with nearly $10 trillion in assets under management. If even 1% of that money gets allocated to crypto, that could result in billions of dollars flowing into Bitcoin.
And don't forget about the role of the retail investor. Financial advisors and private wealth managers will now have a fiduciary duty to tell their clients about the potential benefits of crypto, and to seek out the very best Bitcoin investment products. Within three years, many investors will have likely long forgotten about Bitcoin's previous unsavory reputation.
Global adoption
Bitcoin will also likely see a significant uptick in global adoption. When Ark Invest came up with a $1.5 million price target for Bitcoin by the year 2030, it was based on the idea that Bitcoin would see huge gains within eight key usage areas. For example, Bitcoin will increasingly be used as a store of value, along the lines of physical gold. And Bitcoin will increasingly be used to send cross-border remittances.
Ark Invest also suggests that Bitcoin will play an increasingly important role in the money supply of emerging market nations. El Salvador shocked the world back in 2021 by adopting Bitcoin as legal tender, and I think there could be other, similar stories in the future. There are a lot of exciting Bitcoin-related developments happening in Latin America right now, and I think that this could be a region to watch for Bitcoin adoption.
Bitcoin at $250,000?
What do all these developments mean for the future price of Bitcoin? Within three years, I think Bitcoin could carry a price tag of $250,000.
This might sound like a pie-in-the-sky number, but it's backed up by math. For example, when Ark Invest came up with its $1.5 million price target for Bitcoin, that was based on a compound annual growth rate (CAGR) of 75%. That doesn't mean that Bitcoin will go up 75% each year -- but it does mean that Bitcoin is likely to see a consistent upward trend in price.
If you use a base price of $50,000 (which is where many analysts thought Bitcoin would be trading after initial Bitcoin ETF approval) and use Ark Invest's CAGR number, that means you're likely looking at a price of just under $100,000 by the end of 2024, a price of approximately $150,000 by the end of 2025, and a price of over $250,000 by the end of 2026. (If you continue to extrapolate this over the next few years, that's how you arrive at a figure of $1.5 million by 2030.)
Should you buy Bitcoin now?
While past performance is certainly no guarantee or predictor of future performance, it is noteworthy that Bitcoin was the single best-performing asset in the world between 2011 and 2021. And, while 2022 was a disastrous year for Bitcoin holders, it was back to the same success story in 2023, when Bitcoin's 150% returns trounced those of every other major asset class.
CRYPTO: BTC
Key Data Points
As long as you're aware of the inherent risk and volatility of crypto, it's worth taking a closer look at how Bitcoin could become even just a tiny part of your overall portfolio. The new spot Bitcoin ETF products, while still untested, look to be the safest way to do that for the average investor. That being said, I'm long-term bullish on Bitcoin and am confident that Bitcoin can reach $250,000 within just three years.
