Tom Lee is a managing partner and leads market research at financial services firm Fundstrat Global Advisors.
During a recent panel discussion on CNBC, Lee unveiled his market predictions for 2025. Among them, the research analyst put forth a price target of $250,000 on cryptocurrency Bitcoin (BTC +3.61%) -- implying roughly 163% upside from trading levels on Jan. 9.
Below, I'm going to explore why 2025 could be a breakout year for Bitcoin and make the case for considering the crypto in your portfolio.
CRYPTO: BTC
Key Data Points
Why tariffs could influence a rising interest in crypto investing
Throughout his time on the campaign trail, President-elect Trump often floated the idea of imposing tariffs once he assumes office. While some political pundits and economists view the rhetoric surrounding tariffs as more of a flex than anything else, there are some legitimate concerns if they do go into effect.
In theory, tariffs could significantly raise the prices of goods and materials for businesses. Subsequently, companies would pass these costs onto the consumer which would cause prices to rise. During an inflationary situation such as the one I just described, it's not unusual for consumers to scale back their purchases -- causing economic activity to slow down materially.
If tariffs lead to sluggish economic activity, my bet is that stocks will begin to sell off as businesses witness deceleration across sales and profits. Should this occur, I wouldn't be surprised to see some cohort of the investment community begin to flock toward alternatives such as crypto or commodities.
Image source: Getty Images.
Even without tariffs, the incoming administration has vocally supported crypto
Although tariffs could influence crypto prices to rise, I think the idea explored above is rooted more in theory at the moment. Personally, I think any upside in Bitcoin over the next four years will be a direct result of the incoming administration's approach to the regulatory environment around cryptocurrency.
President-elect Trump and some of his constituents such as RFK Jr. have been vocally supporting Bitcoin for some time now. In particular, RFK Jr. previously suggested that the U.S. Treasury should diversify its balance sheet by building a strategic Bitcoin reserve.
Furthermore, President-elect Trump's nominee to take the reins over at the Securities and Exchange Commission (SEC), Paul Atkins, is a pro-crypto leader who very well could inspire some regulatory changes that could positively influence digital assets such as Bitcoin.
Should you buy Bitcoin in 2025?
Generally speaking, I tend to dismiss price targets put forth by Wall Street analysts. The reason for that is I'm less concerned about specific prices, and more focused on narratives.
To me, the narrative surrounding Bitcoin right now is overwhelmingly positive. I think it is highly likely that the incoming Trump administration will institute policy changes and introduce new regulatory frameworks that are more crypto-friendly.
However, when these potential changes go into effect is a bigger question. That's why I'm not as concerned about Lee's projection for Bitcoin to rise by nearly threefold in 2025, specifically.
Given Bitcoin's relative strength during Trump's prior tenure in the Oval Office, combined with his personal support and a Republican-controlled Congress, I'm quite bullish on Bitcoin's potential over the next four years. With that in mind, I think getting some exposure to the cryptocurrency in 2025 could be a good idea.
One way to do this is through spot Bitcoin ETFs. Alternatively, buying shares in brokerage stocks such as Robinhood and Coinbase, which both have large crypto concentrations, could be a more insulated way to gain exposure to Bitcoin. Lastly, those who would prefer to own Bitcoin outright can always opt to do so.
