For Bitcoin's (BTC 3.34%) price to move by around $20,000, it would need to gain roughly 21% based on its current price of $95,000. Although that type of gain won't occur overnight, history indicates that over the course of a few months, a move of such a size is very possible.
A trio of catalysts could trigger that move in the near term. Here's what's going on.
CRYPTO: BTC
Key Data Points
1. Rising global liquidity
Liquidity is critical to the pricing of cryptocurrencies, especially major ones like Bitcoin. In this context, liquidity refers to the amount of money sloshing around the global financial system, as determined by a combination of factors like central bank lending rates and the ease of accessing credit for businesses and institutional investors. Right now, global liquidity is well above its historical levels, and it might increase from here. Traditionally, such increases have fueled dramatic rises in Bitcoin's price.
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Several of the global financial system's largest central banks are already in credit-loosening cycles, including the European Central Bank (ECB) and the U.K.'s Bank of England, among others. The Federal Reserve in the U.S. may continue its interest rate cuts eventually as well. In sum, it will likely be cheaper for investors to access credit in the coming quarters, which will increase liquidity and power growth in Bitcoin.
2. Sovereign and institutional ownership is picking up
Now is the era of countries and major companies opting to retain or buy Bitcoin, and that's going to force its price higher.
In the U.S., an executive order mandated the creation of a Strategic Bitcoin Reserve comprised of coins seized in asset forfeitures. While that policy hasn't yet been implemented, it's a significant vote in the asset's favor, and it will put more supply pressure on the coin, forcing buyers to compete with each other and leading to higher prices. Other countries are currently evaluating whether to pursue similar policies, which would intensify the supply impact.
Furthermore, many corporations are starting to keep Bitcoin on their balance sheets, thereby taking even more of the supply off the market. For instance, Tesla holds about $1.1 billion of the coin. And big banks in the U.S. are now allowed to hold the asset on their balance sheets after a regulatory change in early 2025, paving the way for them to add to buying pressure, too.
With more wealthy buyers and less supply than ever due to the recent halving of Bitcoin's mining reward last year, the picture is thus quite bullish.
3. Retail investors are buying, too
Despite Bitcoin prices near record highs, small investors are still happily accumulating coins. While they individually don't have as much capital as institutional, sovereign, and corporate buyers, retail investor interest is still a key component of Bitcoin's narrative, as excitement despite rising prices can lead to a self-fulfilling prophecy.
There's also little emotional pressure on these investors to sell right now. About 88% of Bitcoin's supply is being held at a profit right now. So there aren't too many investors sweating about their underwater investment, looking for an opportunity to sell -- or perhaps waiting to crack if their losses deepen.
In short, this suggests most retail investors will be net buyers rather than sellers in the near term. And when it is paired with the other catalysts in play, the bull thesis for Bitcoin is quite strong right now. It's very likely its price will rise by $20,000 within the next couple of quarters, or perhaps even sooner than that.
