In brief
- A Bloomberg report said that Bitcoin is on track to reach $100,000 by 2025.
- Volatile stock performances are driving greater interest in the cryptocurrency.
- However, institutional investors still want greater regulatory clarity and increased market cap, another analyst told Decrypt.
As the stock market continues on a course of volatility, investors are approaching Bitcoin in a similar way to assets like gold, according to a report by Bloomberg. Based on historical trends, the price of Bitcoin is now on track to reach the $100,000 mark by 2025.
The report, the Q4 Edition of the Bloomberg Crypto Outlook, shows that Bitcoin is likely to benefit from an increasingly volatile stock market and be treated as a store of value, like precious metals.
“In a year where U.S. equity prices have reached the highest ever market cap vs. GDP, on the back of the sharpest market cap since the Great Depression, it’s logical to expect most assets to be increasingly subject to the wobbly stock market,” the report from Bloomberg Intelligence senior commodity strategist Mike McGlone says.
The report notes that the price of Bitcoin, which surged over a four-year period from about $1,000 in 2013 to $10,000 in 2017, could reach the $100,000 mark by 2025. That means Bitcoin could reach its 2019 high of $14,000 as early as this year. "Or," it says, "the new technology could fail, but our demand indicators are positive."
The report notes that the market cap of the Grayscale Bitcoin Trust was “approaching Bitcoin equivalent holdings of 500,000,” a figure that is more than twice as large as the same period a year ago.
McGlone further states that Bitcoin, like gold, is seeing increased demand due to increasing stock market volatility. He also cites a chart showing the highest Bitcoin-to-gold 12-month correlation in the BI database since 2010.
Spencer Mindlin, capital markets industry analyst at Aite Group, declined to comment on the price target, but told Decrypt that what will really drive demand is institutional uptake, once there is a greater level of comfort with the size and overall environment surrounding the asset class.
He said there are two main areas that institutional investors are looking for in terms of driving greater clarity. The first is market cap.
“The market cap needs to get bigger in order for it to take something worthy of note by traditional institutional investors,” he said. “If the market cap is not there to support 1% allocation they’re not going to take note of it.”
The second key factor for Mindlin includes issues like the ease of market access and education. He said investors are not yet fully comfortable with regulatory clarity, asset security, and related issues.
But if the price does continue on its current trajectory, investors may get comfortable regardless.