Bernstein has predicted that Bitcoin will surge to $200,000 by the end of 2025 as it continues to gain traction as an institutional asset and the regulatory landscape improves, based on excerpts shared by VanEck’s head of digital assets research, Mathew Sigel.

The bold forecast is part of Bernstein’s latest “Black Book,” titled “From Coin to Compute: The Bitcoin Investing Guide,” which explores Bitcoin’s evolving role in financial portfolios and the compute economy.

The report highlights Bitcoin’s potential to move beyond speculative trading, presenting a strong case for long-term investment opportunities driven by its increasing adoption among institutional investors.

Bernstein “Black Books” are comprehensive and in-depth research reports produced by the global investment management and research firm Bernstein Research. These reports are often regarded as authoritative analyses of specific industries, companies, or financial assets, providing detailed insights, forecasts, and strategic advice.

Institutional adoption

One of the key insights in the report is the increasing adoption of Bitcoin among institutional investors, who are managing the asset’s liquidity and volatility risks.

The report compares Bitcoin’s liquidity profile to that of traditional assets like equities and commodities, showing that while BTC carries higher liquidity risks due to its shorter liquidity duration, institutional investors are still incorporating it into their portfolios.

According to Bernstein, this reflects Bitcoin’s appeal as a long-term hedge against inflation and macroeconomic instability.

The report further suggests that institutional investors are not deterred by the high volatility of Bitcoin; instead, they are deploying advanced risk management strategies to mitigate potential drawdowns, including adjusting portfolio allocations and liquidity buffers to accommodate Bitcoin’s market behavior.

The Compute Economy

Bernstein’s analysis also shifts focus toward Bitcoin’s future role in what it calls the “compute economy.”

The report suggests that Bitcoin is moving beyond its traditional function as a store of value and is becoming an essential part of the global computational landscape.

This involves leveraging Bitcoin’s underlying blockchain infrastructure for computational tasks, which could fuel advancements in technology and data processing.

According to Bernstein, global Bitcoin miners are already scaling up their computational capabilities, with mining pools expanding across various regions.

The report identifies this growing computational power as a key factor in Bitcoin’s anticipated price appreciation. By harnessing blockchain technology for tasks beyond crypto transactions, Bitcoin could unlock new avenues of technological growth.

Regulatory challenges

Despite regulatory ambiguity, particularly in the US, Bernstein’s report suggests that regulatory clarity could provide a significant boost to Bitcoin’s institutional adoption.

The report highlighted the ongoing scrutiny from regulatory bodies like the Securities and Exchange Commission (SEC) but suggested that once clear frameworks are established, institutions will have more confidence in increasing their exposure to Bitcoin.

This regulatory clarity would enable institutions to manage compliance risks more effectively while expanding their Bitcoin holdings. Bernstein’s analysis concludes that a clearer regulatory environment could be a catalyst for Bitcoin reaching the projected $200,000 price target.

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