- Bitcoin could hit $150K in 2025, driven by institutional adoption, corporate use, and nation-state involvement.
- U.S. Bitcoin ETPs may reach $250B AUM by 2025, fueled by record inflows and hedge fund investments.
- Bitcoin’s DeFi market is set to double in 2025, with growth in Bitcoin L2 protocols and staking platforms.
According to Galaxy Research, Bitcoin is expected to perform exceptionally well in 2025, with its price even touching $150,000 in the first half of the year. In the fourth quarter alone, it could trade as high as $185,000. This growth is anticipated to be largely propelled by institutional, corporate, and nation-state usage. The price of BTC has risen at a faster rate than other assets classes such as S&P 500 and gold in the past and this is expected to continue to the year 2025. BTC is expected to account for 20% of the gold market capitalization by the end of this year.
A major factor behind this increase is the increasing demand for US-based BTC exchange-traded products (ETPs). The BTC ETPs are projected to amass $250 billion in AUM by 2025. By 2024 alone, Bitcoin ETPs attracted 36 billion dollars net inflows and was a record year for the launches of ETPs.
Some of the hedge funds, which have already invested in these products include Millennium, Tudor and D.E. Shaw, as well as the State of Wisconsin Investment Board (SWIB). The current AUM of Bitcoin ETPs is only $52.4 billion away from the current AUM of all the U.S physical gold ETPs which stand at $274 billion.
Bitcoin’s Strong Performance
Bitcoin has been one of the best performers on a risk/return basis relative to other asset classes across the globe. By 2024, BTC was seen as the third best performing asset class when compared to stocks, bonds, markers, indices and other tradable commodities.
Source: Galaxy Research
Of interest, MicroStrategy, a company that holds a large amount of BTC, has the highest Sharpe ratio, a measure of risk-adjusted returns. This high performance may lead to at least one large wealth management platform to include a recommendation of at least a 2% allocation to BTC in its model portfolio by 2025, which in turn will increase the demand for BTC ETPs.
The involvement of corporations and nation states will also be important for the BTC’s further evolution. According to a recent report from Galaxy Research, five Nasdaq 100 companies and five sovereign countries will have adopted BTC into their balance sheets or sovereign wealth funds by 2025.
Source: Galaxy Research
BTC’s Expanding DeFi Market
The development community of BTC is also advancing in its endeavors. In 2025, the developers are expected to agree on the next protocol upgrade of the Bitcoin that will make it possible to program the transactions of BTC. These upgrades are expected to enhance the functionality and usability of BTC and despite the fact that the activation of these upgrades is expected to happen after 2025.
The Bitcoin DeFi market is expected to grow in the next year to be twice the size it is today. The total Bitcoin DeFi contracts, which include those within Bitcoin L2 protocols and staking platforms like Babylon, are anticipated to ride high. BTC could be a revolutionary year in 2025 with the support of institutions, the continuous use, and technological developments.
