In 2024, Bitcoin’s price (CRYPTO: BTC) surged by 119%, and there’s been a wave of bullish sentiment as experts speculate on the future of the cryptocurrency. Recently, Tom Lee, the head of research at Fundstrat, predicted that the price of Bitcoin might climb to $250,000 by the end of 2025.

If Lee’s high-end prediction holds, this would represent an incredible 160% increase in Bitcoin’s value. While it’s impossible to accurately predict Bitcoin’s trajectory for this year, several factors may contribute to the optimism among its supporters. Below are a few reasons that could potentially drive the price of Bitcoin upward in 2024.

1. Spot Bitcoin ETFs increasing interest

Last year, the Securities and Exchange Commission (SEC) approved spot Bitcoin exchange-traded funds (ETFs) that mimic Bitcoin’s price trends. These ETFs are easily tradable like stocks, offering a convenient method for investors to gain exposure to Bitcoin without needing to acquire the actual currency.

Currently, there are 12 spot Bitcoin ETFs, with the iShares Bitcoin Trust and Grayscale Bitcoin Trust ETF being among the most prominent. Their widespread availability has contributed to a rise in Bitcoin’s price. Together, these ETFs manage over $100 billion in assets, and CNBC recently labeled their launch as “one of the most successful ETF launches in history.”

To put this into perspective, $100 billion invested in spot Bitcoin ETFs compares to $125 billion in physical gold ETFs, which have existed for 20 years. If the popularity of these ETFs continues in 2024, more investors may begin to explore Bitcoin ETFs this year, potentially leading to an increase in Bitcoin’s price.

2. Shift towards a more crypto-friendly regulatory environment

Another factor that could influence Bitcoin’s price this year is President-elect Trump’s suggestion of establishing a more lenient regulatory atmosphere for Bitcoin. Trump has appointed venture capitalist David Sacks as a “crypto czar,” indicating a softer regulatory approach toward cryptocurrency.

Additionally, Trump selected Paul Atkins, a prominent supporter of cryptocurrency, to lead the SEC. Trump recently stated that Atkins “understands the importance of digital assets & other innovations” in his administration.

Bitcoin’s price has already increased by more than 40% (as of now) following the election, indicating that some optimism about Trump’s presidency and its implications for Bitcoin may already be reflected in current prices. However, for investors waiting on the sidelines, the incoming administration’s approach may encourage them to invest, further boosting Bitcoin’s value.

3. Institutional investors are increasingly interested in digital assets

While institutional investors have largely focused on spot Bitcoin ETFs, there’s also a growing interest in investing in various digital assets beyond just these ETFs. A report from Ernst & Young revealed that 60% of institutions that have invested in spot cryptocurrency are also diversifying into other cryptocurrencies and plan to allocate additional funds to digital assets by 2025.

This trend suggests that institutional investors are becoming more accepting of cryptocurrencies. Increased acceptance among institutions could positively impact Bitcoin’s price, as it may prompt average investors to view Bitcoin as a more conventional investment option.

Reaching $250,000 by 2025 is not guaranteed

Even under the best-case scenario for Bitcoin, achieving Lee’s prediction would require a 2.5 times increase from its current price. Given that Bitcoin has already more than doubled in the past year, this would be a considerable challenge.

Many individuals who have forecasted Bitcoin’s future have made inaccurate predictions (myself included). Thus, making a purchase based only on someone’s prediction may not be wise.

Instead, it’s important to closely examine the current landscape of Bitcoin, including potential regulatory changes and the rising availability through ETFs, while also considering the cryptocurrency’s inherent volatility before making a final investment decision.

Chris Neiger does not hold a position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool’s disclosure policy applies.

The Motley Fool is a content partner of YSL News, providing financial news, analysis, and commentary designed to empower individuals to take control of their financial futures. Its content is produced independently of YSL News.

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