On May 22, Bitcoin (BTC -1.35%) hit a new all-time high of $112,000. For many crypto investors, that's a clear signal that it is about to go parabolic in the second half of 2025.
However, other investors are warning that Bitcoin could be overpriced at such stratospherically high levels. So which is it? Is it about to soar, or about to crash?
The bullish case for Bitcoin
The bullish case is based on continued mainstream adoption. Simply put, everyone seems to be buying Bitcoin these days: retail investors, institutional investors, corporations, and even governments.
There are even companies being launched that do nothing but buy the digital coin. Overseas sovereign wealth funds appear to be getting into the act as well. Meanwhile, individual U.S. states are attempting to launch their own Bitcoin reserves, similar to the one at the federal level.
Image source: Getty Images.
As a result, more money than ever is flowing into the new spot Bitcoin exchange-traded funds (ETFs), since they are the easiest way for many to get exposure to the crypto. In May, more than $1.5 billion flowed into these ETFs immediately after Bitcoin hit a new all-time high, setting up the month to be the best ever for spot Bitcoin ETF inflows.
Theoretically, these new ETF investor inflows should help to push up the token's price. And, indeed, that's what we've seen in April and May. It is now up about 50% from its April lows.
April was an important month, because that's when tariffs were imposed across the board on every major U.S. trade partner. As a result, some investors have started to view the crypto as a potential safe asset, along the lines of gold.
Since the digital coin has historically been uncorrelated with any major asset class, it makes a certain amount of sense that it will be insulated from the worst of the turmoil in global markets. Moreover, as crypto enthusiasts are eager to point out, there are no tariffs on Bitcoin.
The bearish case for Bitcoin
On the other hand, Bitcoin bears argue that the cryptocurrency is wildly overvalued. Mainstream adoption is great, but people aren't doing anything with all those bitcoins. They are simply hoarding them, in the expectation that they will be able to sell them to someone else at a higher price.
From this perspective, it's Dutch tulip mania all over again. Bitcoin is only valuable because everyone else thinks it's valuable. Once people regain their senses, the thinking goes, they will dump it and buy gold or some other valuable asset instead. That's what happened in the Netherlands in the early 17th century -- one day, people woke up and stopped buying tulip bulbs.
As a result, Bitcoin could be due for a significant price decline. The one price target usually mentioned is $70,000. That might sound like an extremely arbitrary price target. But it's also the price that it was trading at on Election Day 2024. And it is also the previous all-time high after the market frenzy of 2021.
What do prediction markets say?
Theory is great, but what's happening in the real world? One place to look for answers are new online prediction markets, where people are staking real dollars on where they think the price of Bitcoin is going.
For example, on the Kalshi prediction market, participants think the crypto has a 78% chance of hitting $125,000 in 2025, a 43% chance of hitting $150,000, and a 16% chance of hitting $200,000.
There's much less appetite for predicting a significant decline. For example, participants think there is only a 22% chance of Bitcoin falling below $70,000, a 15% chance of falling below $60,000, and a 7% chance of falling below $50,000.
The most likely scenario for 2025
Putting it all together, it's possible to come up with a likely Bitcoin scenario for 2025. It will consolidate at the $110,000 level before climbing to $125,000 and setting a new all-time high. If trade and tariff turmoil subsides by then, the digital coin could even rise as high as $150,000. But it's unlikely that it will head much higher than that in 2025.
Instead of focusing too much on specific price targets, though, I'm viewing the price as a probability distribution curve. Yes, there are some statistically improbable events that could send it soaring or crashing, but the most likely outcome is a Bitcoin price between $125,000 and $150,000 by the end of the year.
