Key Points
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Based on key variables, Bitcoin’s fundamentals remain firmly intact, despite what the current bear market might suggest.
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The network’s periodic halving events are part of the cryptocurrency’s historical four-year cycle.
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Artificial intelligence is attracting so much capital and attention at the expense of Bitcoin that the trend could turn into a tailwind.
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Bitcoin’s (CRYPTO: BTC) price currently sits 49% below its all-time high reached last October, as of June 8. It’s an unusual fall because the S&P 500 index, which has had a strong year thus far, is near its record high. The market clearly isn’t rewarding all risk assets equally, as the top cryptocurrency continues to get punished.
The bears are winning the debate right now. But I believe the bulls will have the last laugh.
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I predict that Bitcoin will rise by 290% from $64,000 today to hit $250,000 before the next halving event, which is expected to take place in April 2028. Here are three reasons why.
Image source: Getty Images.
The fundamentals haven’t changed
When companies’ share prices take a hit, the best investors first consider whether the fundamentals are still sound. Bitcoin can be viewed in a similar light.
The underlying network continues to operate as it always has. There have been no hacks. Trillions of dollars in transaction volume move annually. While down, the hash rate is still near all-time highs. And the community of nodes, miners, and developers is healthy.
It’s also important to look at the developments happening around Bitcoin, particularly in financial services. Block enables Bitcoin payment acceptance for its merchants. Morgan Stanley, which has $1.9 trillion in assets under management just in its investment management division, launched a spot Bitcoin exchange-traded fund in early April that currently has $235 million in assets.
And the U.S. government has been warming up to Bitcoin. Favorable regulatory developments and the strategic reserve show this.
The four-year cycle lives on
Bitcoin is a relatively young asset, as its first block was mined in January 2009. But anyone who observes its history will see that the crypto’s price experiences four-year cycles of booms and busts, as its bull-market highs and bear-market lows have occurred roughly every 48 months or so. This might help us figure out where it’s going.
When Bitcoin’s halving occurs, it always trades higher than where it was during the previous halving, although the level of appreciation slows. At the last halving in April 2024, the digital asset was up 650% from the prior one in May 2020, at which point it had climbed about 1,208% since the previous halving in July 2016.
Assuming the rate of return continues to decelerate, Bitcoin’s price could be trading around of $250,000 at the next halving in spring 2028.
AI could go from a headwind to a tailwind
Experts think that artificial intelligence (AI) is one of the reasons Bitcoin is showing no signs of life, as so much capital is being directed into the AI ecosystem, as evidenced by the performance of related stocks. Upcoming trillion-dollar initial public offerings and Alphabet‘s recently announced $85 billion equity raise are more proof.
AI is devouring capital and attention. Maybe in an alternative universe that is less excited about AI, these would have found their way to Bitcoin.
Maybe the AI headwind will evolve into a tailwind. If AI advances as industry optimists hope, the market will recognize the need for a decentralized, digital, and scarce medium of exchange and store of value. This could bring the spotlight back to Bitcoin.
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Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Bitcoin, and Block. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
