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Bitcoin Could Reach $500,000 by October 2025, According to This Billionaire Investor
During the first six months of 2024, you’ve probably heard all sorts of ultra-bullish predictions about where the price of Bitcoin (CRYPTO:BTC) could be next. International bank Standard Chartered, for example, now thinks Bitcoin could rise to $150,000 by the end of 2024.
This price target is aggressive, but it may not be aggressive enough. Billionaire venture capitalist Chamath Palihapitiya thinks so Bitcoin it could reach $500,000 by October 2025. According to Palihapitiya, two key catalysts could make this happen.
The halving of Bitcoin
The primary catalyst for rapid price appreciation is the halving. Bitcoin recently had its fourth halving on April 19, and the current expectation is that this event will unlock massive value over the next year.
Image source: Getty Images.
At each halving, the reward paid to Bitcoin miners is halved. This may not seem like a big deal (unless you are a Bitcoin miner), but it has profound implications for the price of Bitcoin. First, the halving increases the scarcity of Bitcoin. Secondly, it also reinforces the anti-inflationary nature of Bitcoin, making it even more sought after as a hedge against inflation.
It is the combination of these two factors that has led to truly stratospheric returns for Bitcoin in previous halving cycles. In May 2020, for example, Bitcoin rose from a price of around $8,800 to a (then) all-time high of $69,000 in November 2021.
To model Bitcoin’s future price performance, Palihapitiya analyzed Bitcoin’s price performance over different time frames of the 2020 halving cycle. Over the course of the first three months, Bitcoin’s price “only” increased by a multiple of 1.37x, as investors tried to understand what was happening to Bitcoin. But as the effects of the halving began to manifest, the price of Bitcoin increased by a multiple of 6.51x in 12 months and 7.8x in 18 months.
Using these numbers, Palihapitiya says it’s possible to construct a potential timeline of how Bitcoin’s price might rise during the 2024 halving cycle. We can likely expect Bitcoin’s price to trade largely sideways for much of the summer . This marks the first three months of the cycle. But the price of Bitcoin may start to rise as we approach the fall and winter. By next April, the price of Bitcoin could be on track to reach $500,000.
Of course, past performance is no guarantee of future performance. Just because Bitcoin behaved a certain way four years ago is no guarantee that it will behave the same way today. To some extent, Palihapitiya recognizes this. Given even larger price increases in the 2012 and 2016 halving cycles, Palihapitiya focused only on the 2020 halving cycle to keep price estimates as conservative as possible.
The story continues
Bitcoin as a reserve asset
The second key factor is Bitcoin’s growing opportunity to become a global reserve asset. According to Palihapitiya, non-Western nations are increasingly likely to become a “dual currency.” This means they will choose to hold both their national currencies and Bitcoin.
You’re probably thinking: why would a nation want to hold Bitcoin when it can hold US dollars? Well, let’s consider the plight of the dollar. The United States is adding $1 trillion in new debt every 100 days, and its budget deficits are becoming worrisome. The more debt the United States takes on, the more money it has to print and the less valuable the dollar becomes. Palihapitiya refers to this as the “dollar devaluation” process.
Given this context, it is possible to understand why some non-Western nations may no longer want to hold dollars. Case in point: Saudi Arabia is rethinking its petrodollar deal with the United States. This 50-year-old agreement is undoubtedly one of the most important pillars of the modern global economy. It forces everyone in the world to buy dollars to buy oil and ensures constant demand for US debt.
If nations around the world start holding fewer dollars, this could open the door to Bitcoin. Add in the fact that many institutional investors now view Bitcoin as a form of “digital gold,” and it’s easy to see the path to Bitcoin becoming a reserve asset. At some point, Palihapitiya thinks Bitcoin could completely replace gold.
How likely is this scenario?
While it is possible to poke holes in the thesis that “Bitcoin halving leads to huge price increases,” even skeptics have to admit that this time there is something fundamentally new with the 2024 halving. This is the first This is the first time we have had spot Bitcoin ETFs and this could make all the difference. Any selling pressure in the cryptocurrency market could be offset by new investor flows into ETFs.
As a result, I am still bullish on Bitcoin, despite its recent lackluster performance following the April halving. If things go according to plan, cryptocurrency investors could have a lot to celebrate in 2025.
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Domenico Basulto has positions in Bitcoin. The Motley Fool has positions and recommends Bitcoin. The Motley Fool has a disclosure policy.
Bitcoin Could Reach $500,000 by October 2025, According to This Billionaire Investor was originally published by The Motley Fool