Bitcoin could “overshoot” to a high of around US$250,000 ($334,411) in 2025 if exchange-traded fund (ETF) inflows continue apace, says Standard Chartered Bank’s head of FX research, west and digital assets research Geoff Kendrick.
The same is likely to happen if reserve managers announce they have been buying Bitcoin, which Kendrick believes will ultimately settle around US$200,000 by end-2025, forming the new midpoint of a higher trading range.
Rapid inflows to the new Bitcoin spot ETFs have dominated since the ETFs were launched on Jan 11, with net inflows exceeding increases in open interest.
This means that while open interest measures are approaching stretched 2021 levels, overall positioning should be more sustainable this time, says Kendrick, adding that most of the inflows are likely to be sticky pension-type flows.
Standard Chartered analysts have previously used gold as a proxy for the cryptocurrency to assess where Bitcoin prices might go based on exchange-traded flows, and have done the same in their latest projections.
“We believe that both of these comparisons are still relevant and provide insights into how the Bitcoin price might develop,” says Kendrick, who has used three separate gold-based measures in his assessment.
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Earlier for gold and more recently for Bitcoin, exchange-traded products (ETPs) and ETFs allowed a new set of investors to gain access to a market that was previously underinvested, he explains.
In gold’s case, it took several years for the ETP market to mature, during which time the gold price rose 4.3x. In the instance of Bitcoin, Kendrick predicts that the ETF market will mature much faster — in one to two years — but result in the same price multiple, forming the basis for his estimated price level of US$200,000 at end-2025.
Secondly, using gold in the context of an optimised gold-Bitcoin two-asset portfolio also suggests a level around US$190,000, based on an optimised 80% gold and 20% Bitcoin portfolio at current gold prices.
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Finally, a linear extrapolation of the correlation between ETF inflows and the Bitcoin price suggests a Bitcoin price level around US$250,000 assuming that total ETF inflows, until the market matures, are around Kendrick’s mid-point estimate of US$75 billion.
“This suggests to us that US$200,000 is the ‘correct’ end-2025 price level for BTC, in line with our previous price estimate, and that it is likely to be the new midpoint for a sideways trading range at that time,” he says.
“However, if ETF inflows reach our mid-point estimate of US$75 billion, and/or if reserve managers buy BTC, we see a good chance of an overshoot to the US$250,000 level at some stage in 2025,” adds the analyst.
For end-2024, Kendrick has raised his long-held price estimate to the US$150,000 level from US$100,000 given the more rapid pass-through from ETF inflows to the BTC price to date.
