A blistering post-election rally by Bitcoin (CRYPTO: BTC) to the $100,000 price level may have just been the start of a much longer rally that could extend well into 2025. That's the opinion of billionaire Silicon Valley venture capitalist Tim Draper, who has been investing in tech companies since the internet boom of the 1990s.
How much higher does Draper think Bitcoin could go? He's currently expecting Bitcoin to hit $250,000 by the end of 2025. Based on Bitcoin's current price of $97,000, that would represent a more than 150% return over the next 12 months. Will he be right?
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Bitcoin's path to $250,000
Draper is primarily thinking of Bitcoin as a world-class payment technology that could start to take over a greater and greater share of the modern financial system. In a recent interview, he noted, "Bitcoin is just better technology than using banks and governments as the trusted third party."
Since Bitcoin runs on the blockchain, it's transparent, global, open, and theoretically impervious to outside hackers. Moreover, it's decentralized, meaning no central authority -- such as a central bank, corporation, or sovereign government -- controls it.
Even with this superior technology, Bitcoin will need a lot to go right if it is going to hit $250,000. According to Draper, it will require mainstream adoption at a much faster pace than is happening now. While there's no denying that people are adding Bitcoin to their portfolios via the new spot Bitcoin ETFs , there's not nearly as much usage as there should be. In short, people are hoarding Bitcoin, but they're not using Bitcoin.
Remember when predications said people would be routinely using Bitcoin for everyday transactions? Or when people predicted that governments around the world would be adopting Bitcoin? That hasn't happened, with a few high-profile exceptions.
The case that everyone talks about is El Salvador, which famously adopted Bitcoin as legal tender in 2021. However, the results have been mixed there, with recent academic research suggesting that everyday citizens simply aren't embracing Bitcoin the way people thought they would.
New catalysts for Bitcoin?
Still, something feels different this time around with Bitcoin. Maybe it's the pro-crypto optimism surrounding the Trump administration, which appears willing to take active steps to promote Bitcoin. During the campaign, Donald Trump promised to support the Bitcoin mining industry and create a pro-business environment for cryptocurrency. In addition, he promised to create a strategic Bitcoin reserve, which would commit to buying 1 million Bitcoins over the next five years.
Indeed, Draper points to this push for less government regulation of crypto and the creation of a strategic Bitcoin reserve as two factors that could propel Bitcoin to $250,000. Draper is now expecting Bitcoin to hit $120,000 before the end of the year and then double in value next year.
Previous $250,000 predictions
While the argument is certainly compelling, just keep in mind that Tim Draper has been making $250,000 price predictions for Bitcoin for several years now. In 2018, he famously predicted that Bitcoin would hit $250,000 by 2022. The highest that Bitcoin reached during that period was $69,000.
Then, amid the crypto market meltdown of 2022, Draper amended his Bitcoin forecast to $250,000 by mid-2023. That, too, did not come to fruition. While Bitcoin continues to hit new all-time highs, it has yet to break through the psychologically important $100,000 price level (although it has come tantalizingly close).
Why have previous $250,000 price forecasts fallen short? Perhaps it's because Draper focuses on mass adoption by online retailers as one of the keys to Bitcoin's future success. As he sees it, blockchain technology offers online retailers a superior option for processing transactions than credit cards, and it would seem to be a no-brainer to offer customers the option to pay in Bitcoin when checking out.
No doubt, this is due to Tim Draper's paradigm of the world, which is highly informed by his experience in Silicon Valley. Online e-commerce was arguably one of the biggest innovations that came out of Silicon Valley's internet boom. But when was the last time you used Bitcoin to pay for anything online?
Bullish on Bitcoin for 2025
From my perspective, it's far better to focus on the growing adoption of Bitcoin by institutional investors, who are showing a real willingness to add Bitcoin to their portfolios. By opening up Bitcoin to these investors, the new spot Bitcoin ETFs have been a home run. In less than 12 months, these Bitcoin ETFs have pulled in tens of billions of dollars from investors. The iShares Bitcoin Trust (NASDAQ: IBIT) is leading the way, with more than $40 billion in assets under management.
When you combine this institutional buying pressure with new government buying pressure that would result from the creation of a strategic Bitcoin reserve, all signals appear to be flashing green for 2025. Bitcoin has a historical track record of turning in triple-digit annual returns, and it wouldn't surprise me in the least if Bitcoin eventually hits the long-awaited $250,000 price level next year.
Before you buy stock in Bitcoin, consider this:
