Research and brokerage firm Bernstein has revised its bitcoin price target, predicting the cryptocurrency will soar to $200,000 by the end of 2025. This is a significant increase from their previous target of $150,000, driven by expectations of substantial demand from spot bitcoin exchange-traded funds (ETFs) managed by leading asset managers like BlackRock, Fidelity, and Franklin Templeton.

According to Bernstein analysts Gautam Chhugani and Mahika Sapra, these ETFs could see their assets under management surge to $190 billion from the current $60 billion.

"We believe that U.S. regulated ETFs have been a watershed moment for crypto, creating structural demand from traditional pools of capital," the analysts stated in a note to clients. They noted that approximately $15 billion in net new flows have already been attracted by these ETFs. By 2025, they expect bitcoin ETFs to account for around 7% of bitcoin in circulation and approximately 15% of the total bitcoin supply by 2033.

Another factor influencing this optimistic outlook is bitcoin's supply constraints following the recent halving event in April. The halving reduced the miners' block subsidy reward from 6.25 BTC to 3.125 BTC, effectively cutting the new daily supply of bitcoin from 900 BTC to 450 BTC. This reduction in supply, coupled with increasing demand, sets the stage for a new bull cycle, according to the analysts.

"The halving presents a unique circumstance where the natural sell-pressure from miners declines by half, while new catalysts for bitcoin demand emerge, potentially leading to exponential price increases," Chhugani and Sapra explained.

Reflecting on past bitcoin cycles, the analysts noted that bitcoin reached a high of roughly five times the marginal cost of production in 2017 and then hit a low of 0.8 times the marginal cost in 2018. Similarly, in 2021, bitcoin rose to about 2.3 times the marginal cost before bottoming at 0.7 times the marginal cost in 2022, weeding out inefficient miners. For the 2024-2027 cycle, Bernstein anticipates bitcoin will rally to 1.5 times its marginal cost of production, implying a peak price of $200,000 by mid-2025, which represents a 2.8x appreciation from today's prices.

Long-Term Projections and MicroStrategy's Strategic Moves

Looking beyond 2025, Bernstein's base case scenario suggests that bitcoin could reach $500,000 by the end of 2029 and $1 million by 2033. As of now, bitcoin is trading at $67,123 according to The Block’s bitcoin price page.

In addition to their bullish outlook on bitcoin, Bernstein analysts have initiated coverage on MicroStrategy, a business intelligence firm and prominent corporate bitcoin holder, with an outperform rating. They have set a target price of $2,890 for MicroStrategy stock by the end of 2025, predicting an 80% upside.

"Investors see MicroStrategy as a means to gain active and leveraged equity exposure to bitcoin," the analysts noted. They highlighted that MicroStrategy’s active leveraged strategy has outperformed bitcoin spot prices, with the net asset value per share growing fourfold compared to a 2.4x increase in bitcoin spot prices over the last four years since adopting a bitcoin strategy.

MicroStrategy recently proposed a $500 million convertible senior note offering to acquire additional bitcoin and for general corporate purposes, with an option for an additional $75 million. The firm, which already holds 214,400 BTC—about 1.1% of the circulating supply valued at over $14 billion—also announced the redemption of $650 million of its 2025 convertible senior notes.

"Our risk analysis suggests low risk for the 2025 convertible notes and moderate risk for the 2027/2030 convertibles, based on today’s bitcoin price, which is already in-the-money. The 2027/2030 convertible debt would require a bitcoin price above $125,000, a 10% premium to MicroStrategy stock," Chhugani and Sapra added. They believe that MicroStrategy’s long-term convertible debt strategy allows it sufficient time to benefit from bitcoin’s upside potential with limited liquidation risk to its bitcoin holdings.

By the end of 2025, Bernstein estimates that MicroStrategy will own 1.5% of bitcoin's total supply. Notably, Gautam Chhugani maintains long positions in various cryptocurrencies, reinforcing his bullish stance on the market.