Bitcoin Could Hit $500,000 by October 2025, According to This Billionaire Investor

Throughout the first six months of 2024, you’ve probably heard all kinds of wildly bullish predictions about where the price of Bitcoin (CRYPTO: BTC) might go next. For example, international bank Standard Chartered thinks Bitcoin could rise to $150,000 by the end of 2024.

This price target is aggressive but may not be aggressive enough. Billionaire venture capitalist Chamath Palihapitiya thinks Bitcoin could reach $500,000 by October 2025. According to Palihapitiya, two important catalysts can make this happen.

Bitcoin halving

The primary catalyst for rapid price growth is the halving. Bitcoin recently held its fourth halving on April 19, and the current expectation is that this event will unlock tremendous value in the coming year.

Image source: Getty Images.

In each halving, the reward paid to Bitcoin miners is halved. This might not seem like a big deal (unless you’re a Bitcoin miner), but it has profound effects on the price of Bitcoin. First, the halving increases Bitcoin’s scarcity. Secondly, it also reinforces Bitcoin’s anti-inflationary nature, making it even more sought after as a hedge against inflation.

It is the combination of these two factors that has led to truly extraordinary returns for Bitcoin in previous halving cycles. For example, in May 2020, Bitcoin rose from a price of around $8,800 to a (then) all-time high of $69,000 in November 2021.

Palihapitiya analyzed Bitcoin’s price performance over different time periods of the 2020 halving cycle to model Bitcoin’s future price performance. As investors tried to figure out what was happening to Bitcoin, the price of Bitcoin rose “only” 1.37x in the first three months. However, as the effects of the halving began to be seen, the price of Bitcoin increased by 6.51 times in 12 months and 7.8 times in 18 months.

Using these figures, Palihapitiya says it is possible to create a potential timeline for how the price of Bitcoin could rise in the 2024 halving cycle. We can probably expect the Bitcoin price to trade sideways for most of the summer. This marks the first three months of the cycle. However, as we enter the fall and winter, the price of Bitcoin may begin to increase. By next April, Bitcoin’s price could be heading towards $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 it will behave the same way today. Palihapitiya acknowledges this to some extent. Given the even larger price increases in the 2012 and 2016 halving cycles, Palihapitiya focused solely on the 2020 halving cycle to keep his price predictions as conservative as possible.

The story continues

Bitcoin as a reserve asset

The second important factor is the increasing opportunity for Bitcoin to become a global reserve asset. According to Palihapitiya, the possibility of non-Western nations becoming “dual currencies” is increasingly likely. This means they will choose to hold both their local currency and Bitcoin.

You’re probably thinking: Why would a nation that holds US dollars want to hold Bitcoin? Consider the situation of the dollar. The US is adding $1 trillion in new debt every 100 days, and budget deficits are becoming alarming. The more the US borrows, the more money it has to print and the less the value of the dollar becomes. Palihapitiya calls this a process of “dollar devaluation.”

Given this context, it is possible to understand why some non-Western nations no longer want to hold dollars. Case in point: Saudi Arabia is rethinking its petrodollar deal with the United States. It can be said that this regulation, which has been going on for 50 years, is arguably 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 continued demand for US debt.

If countries around the world start holding fewer dollars, this could open the door to Bitcoin. Considering that many institutional investors now view Bitcoin as a form of “digital gold,” it is easy to see Bitcoin’s path to becoming a reserve asset. Palihapitiya thinks that at some point Bitcoin could completely replace gold.

How likely is this scenario?

Although it is possible to poke holes in the thesis that “Bitcoin halving led to huge price increases”, even skeptics have to admit that something fundamentally new is happening this time in the 2024 halving. This is the first time we’ve ever had spot Bitcoin ETFs, and that could make a big difference. Any selling pressure in the crypto market could be offset by an influx of new investors into ETFs.

In conclusion, I think Bitcoin is still on the rise despite its lackluster performance since the halving in April. If things go as planned, crypto investors may have a lot to celebrate in 2025.

Should you invest $1,000 in Bitcoin right now?

Before buying stocks in Bitcoin, consider this:

The Motley Fool Stock Advisor analyst team identified what they believe are the 10 best stocks for investors to buy right now… and Bitcoin wasn’t one of them. The 10 stocks that made the cut could deliver monster returns in the coming years.

Consider that Nvidia made this list on April 15, 2005… if you had invested $1,000 on the date we recommended, you would have had $801,365!*

Stock Advisor provides investors with an easy-to-follow success plan, including guidance on portfolio construction, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of the S&P 500 since 2002*.

See the 10 stocks »

*Stock Advisor returns as of June 10, 2024

Dominic Basulto has positions in Bitcoin. The Motley Fool has positions in Bitcoin and recommends it. The Motley Fool has a disclosure policy.

Bitcoin Could Reach $500,000 By October 2025, According to This Billionaire Investor by The Motley Fool