If you've been waiting for a big breakout rally from Bitcoin (BTC -0.72%), you might not have to wait much longer. That's according to Wall Street strategist Tom Lee of Fundstrat. He says that Bitcoin could "easily" hit $200,000 by the end of the year.
Given that only three months remain in 2025, such a huge run-up price in such a short period of time would require yet another monster year-end rally from Bitcoin, similar to the one that took place last year. So is it really possible?
Why Tom Lee is bullish on Bitcoin
The primary reason for Lee's bullishness on Bitcoin can be broken down to just three words: Fed rate cuts. As Lee sees it, the Federal Reserve is now in line to cut interest rates three times this year, starting in September.
That's good news for Bitcoin because cryptocurrencies are "super-sensitive to monetary policy," Lee points out. He's right. If history is any guide, Fed rate cuts incentivize investors to move into risky assets such as Bitcoin. That's especially the case since the Fed has declined to cut rates for nine months, and investors are now champing at the bit.
Image source: Getty Images.
As soon as the Fed begins its program of easing, Lee says, money will begin to flow into Bitcoin at a rapid rate. If the Fed moves to cut interest rates by 50 basis points (0.50%) instead of just 25 basis points (0.25%), that could really embolden investors to move into crypto. In an ultra-bullish scenario, that could be enough to push Bitcoin's price up to the $200,000 level.
Are there any other catalysts for Bitcoin?
Of course, it's tremendously risky to rely on just a single catalyst to push Bitcoin higher. That's what worries me. The enormous wave of Bitcoin purchases by Bitcoin treasury companies during the summer may not be sustainable over the long haul, and there really aren't other catalysts on the horizon for Bitcoin right now.
The one catalyst that everyone was counting on -- a sustained buying program by the U.S. Treasury to boost the planned Strategic Bitcoin Reserve -- has likely been put on hold until at least 2026.
In August, Treasury Secretary Scott Bessent said that the U.S. government would continue to build the Strategic Bitcoin Reserve via asset seizures and confiscations, but would not commit to new purchases of Bitcoin. Later, Bessent updated his comments to leave open the door for "budget-neutral" purchases of Bitcoin in 2025.
What is the psychology of the market?
It's a bit simplistic to assume that cutting rates will immediately send Bitcoin higher. In fact, during his CNBC interview, Lee hinted that quite a bit of market psychology is involved here. It's really an "expectations game" at this point. What is the market expecting, and what will it actually get?
A 25-basis-point cut is likely already priced in. Market participants (and President Donald Trump) have been doing everything possible for the past nine months to get the Fed to cut rates. So everyone knows a rate cut is probably coming soon.
It might require a monster 50-basis-point cut to really get the attention of the market -- or at least some sign from the Fed that more easing could be on the way in early 2026.
In his CNBC interview, Lee also mentioned the seasonality of crypto and how that affects the psychology of the market. For some reason, crypto tends to perform badly in August and September, before roaring to life at the end of the year.
Investors saw this phenomenon play out last year, when Bitcoin went on a stunning year-end rally after stumbling in August and September. Just keep in mind: The election of a pro-crypto president in November was what likely set this rally into motion, not some amorphous seasonality factor that investors can count on, year in and year out.
Where is Bitcoin headed later in 2025?
Interestingly, online prediction markets are not giving Bitcoin much of a chance to hit $200,000 this year. On the Kalshi prediction market, for example, traders are only giving Bitcoin a 6% chance. The good news is that there's a 77% chance of Bitcoin setting a new all-time high of $125,000, and a 28% chance of Bitcoin hitting $150,000.
Bitcoin remains a fantastic long-term investment opportunity. However, it might be asking too much for Bitcoin to almost double in price in just three months. If you're thinking about investing in Bitcoin, you need to be comfortable with a maximum price target of $150,000 for 2025. That's still a nice 30% run-up from today's prices, but not nearly as aggressive as some top analysts are now predicting.
