Bitcoin (BTC +0.42%) can be a volatile asset. But that hasn't stopped some analysts, experts, and billionaires from turning extremely bullish on the world's largest cryptocurrency and buying huge amounts of it. After recent purchases the other day, billionaire Michael Saylor's company MicroStrategy Incorporated owned 1.17% of all Bitcoin outstanding. Other billionaires, including Elon Musk and the Winklevoss twins, have also purchased huge amounts of Bitcoin.
These billionaires seem to be in line with one Wall Street analyst who recently issued a research note suggesting the price of Bitcoin could jump 116% from current levels and hit $125,000 by year's end. Let's take a look.
Impact of the election
In a recent report by the investment bank Standard Chartered, a team of analysts said that Bitcoin is poised to hit a new high by the end of the year, which is only a few months away. The bank considered several economic and political factors in reaching this conclusion.
First, Standard Chartered looked at how the presidential election might affect Bitcoin, ultimately determining that the outcome is less important than people think.
"Progress on relaxing regulations -- particularly the repeal of SAB 121, which imposes stringent accounting rules on banks' digital asset holdings -- will continue in 2025 no matter who is in the White House," Geoff Kendrick, global head of digital assets research at Standard Chartered, wrote in his note. Still, Kendrick thinks crypto deregulation will move faster if former President Donald Trump wins rather Vice President Kamala Harris, although he still thinks it would eventually happen under a Harris presidency, too.
Kendrick believes that a Harris victory would likely lead to an initial decrease in the price of Bitcoin but that it wouldn't last long due to other external factors. Kendrick assigned Bitcoin a $125,000 price target if Trump wins and a $75,000 price target if Harris wins.
The economic impact
Aside from the election, Kendrick also thinks Bitcoin will start "building positive momentum" as the yield curve un-inverts after more than two years and starts to steepen, with long-term yields exceeding short-term yields.
That certainly makes sense from a historical perspective because Bitcoin has performed well in falling-interest-rate environments, which tend to increase investment in riskier assets because Treasury bills no longer yield as much. Additionally, lower interest rates typically result in a weaker U.S. dollar, creating another environment in which Bitcoin has performed well because it is viewed as an alternative to traditional currencies like the dollar.
Bitcoin Price data by YCharts
As you can see above, Bitcoin has performed very well in a lower-interest-rate environment. Recently, it's also been resilient in the higher-rate environment.
Bitcoin and price targets
Price targets are difficult to predict for even the oldest blue-chip stocks, but they are especially difficult for an asset like Bitcoin, which can be more volatile than a traditional stock. We are also still in the process of learning more about Bitcoin and other cryptocurrencies.
Now, the billionaires who own Bitcoin have predicted some pretty outlandish price targets. For instance, Saylor thinks the price of Bitcoin could hit $13 million by 2045. Maybe, but it seems like an aggressive call. The good news about price targets from Wall Street is that they are usually placed 12 to 18 months out and are therefore a little more realistic.
I couldn't tell you whether Bitcoin will hit $75,000 or $125,000 by year's end. But I do think Bitcoin has long-term upside and can be a part of your portfolio.
