Wall Street asset management giant VanEck predicts that Bitcoin, Ethereum (ETH) and Solana token SOL, a US blue chip public chain, will all hit record highs in 2025. The agency rarely predicts that Bitcoin will reach $180,000 next year. BlackRock recommends that no more than 2% of the portfolio be invested in Bitcoin.
“We believe the cryptocurrency bull run will continue until 2025 and reach its first peak in the first quarter,” VanEck wrote in its latest cryptocurrency forecast. “At the peak of the cycle, we forecast Bitcoin to be worth around $180,000, while Ethereum will trade at over $6,000. Other well-known projects, such as SOL and SUI, could exceed $500 and $10, respectively.”
The report mentioned: “After the first peak, we expect Bitcoin to see a 30% retracement, and altcoins will face sharp declines of up to 60% as the market consolidates in the summer. However, a recovery may occur in the fall, and major tokens will regain momentum and regain their previous historical highs by the end of the year.”
To determine when the market is nearing a peak, the asset management giant is monitoring the following key signals:
Sustained high funding rates: When traders borrow funds to bet on rising bitcoin prices, they are willing to pay funding rates of more than 10% for three months or more, indicating excessive speculation.
Excessive unrealized profits: If the percentage of Bitcoin holders with large paper gains (profit-to-cost ratio of 70% or more) stabilizes, it would indicate market euphoria.
Market capitalization is overvalued relative to realized value: When the market value to realized value (MVRV) score exceeds 5, it indicates that the Bitcoin price is well above the average purchase price, which generally indicates an overheated situation.
Declining Bitcoin dominance: If Bitcoin’s share of the total cryptocurrency market falls below 40%, it would signal a speculative shift toward riskier altcoins, a typical late-cycle behavior.
Mainstream speculation: A flood of text messages from crypto-illiterate friends asking about dubious projects is a reliable sign of a speculative frenzy approaching the top.
“Historically, these indicators have been reliable signals of market prosperity and will guide our outlook as we navigate the market cycle expected through 2025,” the report stressed.
Looking ahead to Bitcoin prices, VanEck went on to cite multiple potential catalysts for a surge in prices, including:
1. The United States embraces Bitcoin with strategic reserves;
2. Cryptocurrency regulation is becoming more relaxed due to changes in the U.S. Securities and Exchange Commission;
3. The value of tokenized securities could exceed $50 billion.
VanEck’s cryptocurrency price predictions are slightly more conservative than those published by Bitwise earlier this week, which predicted that Bitcoin would reach $200,000, Ethereum would reach $7,000, and Sol could reach $750. Each of these predictions suggests that its price will rise by about 100% from its current price.
BlackRock: Recommends 2% of portfolio allocation to cryptocurrencies
According to Fortune, BlackRock believes that investing up to 2% of a multi-asset portfolio in Bitcoin is a "reasonable range". It entered the cryptocurrency field this year by launching a spot Bitcoin exchange-traded fund and said that in a typical portfolio consisting of 60% stocks and 40% bonds, this weight produces risks similar to those of the "Magnificent Seven" - a group of super-large market capitalization technology stocks.
“Why not more? Going beyond this number would significantly increase Bitcoin’s share of overall portfolio risk,” the report said.
When considering Bitcoin, BlackRock recommends that investors take a “risk budgeting approach,” which is defined as determining the amount of money allocated to an investment based on its contribution to the overall risk of a portfolio, as measured by the asset’s volatility and correlation with movements in other assets.
According to a September report by BlackRock, in addition to its high volatility, Bitcoin's value is generally less correlated with other assets. The company said that because Bitcoin is a decentralized currency that is not affected by major geopolitical risks and inflation, it is a "unique diversification tool." The report said that putting up to 2% of a portfolio in Bitcoin can add different sources of returns without incurring excessive risk.
But Thursday's report made clear that bitcoin's future remains unclear and its appeal as an investment could change. BlackRock warned investors to be wary of bitcoin's volatility and vulnerability to a sharp sell-off.
“Taking all of these factors into account, we do think it makes sense to include Bitcoin in a multi-asset portfolio — provided you believe it will see wider adoption in the future and are willing to take the risk of a potentially rapid price collapse,” the report said.
