Since its price cratered 65% in 2022, Bitcoin (BTC -0.78%) has come roaring back. Last year, it surged 154%, thanks to strong gains within the overall cryptocurrency and stock markets.
At a price of just over $43,000 as of Feb. 1, Bitcoin remains well off its peak price of nearly $69,000 in November 2021. Bullish investors are sure that there is a lot more upside when it comes to the world's most valuable cryptocurrency.
I think Bitcoin is on its way to reaching $100,000 sometime in 2025. Let's take a closer look at why.
Bitcoin's best features
I think it's important to first understand what makes Bitcoin special. Yes, this is a cryptocurrency. But it stands out among the tens of thousands out there because it is truly decentralized and not controlled by a single entity or a group of people. This is why the Securities and Exchange Commission (SEC) has already said that Bitcoin is a commodity, like wheat or gold, rather than a stock-like security.
Bitcoin can be compared to gold or a fiat currency like the U.S. dollar, as opposed to equities like Apple or Tesla stock. But Bitcoin has far superior value-holding characteristics.
For starters, Bitcoin is more portable, divisible, and transactable than gold. And even more important, there will only ever be 21 million coins in circulation. This makes it absolutely finite. Gold, which has long been viewed as the best store of value, can experience a rise in supply should there be a surge in demand. Bitcoin's inflation rate, on the other hand, is already predetermined. Demand cannot influence supply.
By comparison, the deficiencies of the U.S. dollar are strikingly obvious. Whereas fiat currencies are controlled by the central banks, which helps explain why money supply has skyrocketed in the last decade, no central authority can alter how Bitcoin operates. And this makes it an attractive asset to own that isn't influenced by ongoing money printing and the tweaking of interest rates.
Bitcoin's catalysts
Earlier this year, the SEC approved numerous spot Bitcoin exchange-traded funds, a highly anticipated event. Since that day on Jan. 10 to the evening of Feb. 1, Bitcoin's price has fallen 8%. The short-term price decline distracts from a more important topic.
In the world of traditional financial institutions, Bitcoin has become a legitimate asset. It has a stamp of approval from the SEC, and there is now an easy way for both individual and institutional investors to gain exposure to Bitcoin. This seems like a positive development.
However, I believe the most important thing to watch out for in the near term is the upcoming halving, set to take place in April. Happening every four years, the halving cuts the reward that miners receive for approving transactions in half. Historically, during the several months leading up to a halving, and the several months after one, Bitcoin has benefited from a raging bull market.
It makes sense. Decreasing new supply is met with higher levels of demand, which, according to basic economic theory, will result in a higher price.
There are a lot of reasons to appreciate Bitcoin. It has interesting qualities that make it easy to understand why it has become one of the best-performing assets in the last decade, with a current market cap of $844 billion. But I think the upcoming halving will be a major catalyst that will propel the continuation of what has been a strong run for Bitcoin.
And by the end of 2025, it's totally reasonable for Bitcoin to reach a new all-time high and break the six-figure mark of $100,000. All the stars are aligning.
