Daily Update: Bitcoin Gains Mainstream Acceptance
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As we flip the page to 2025 and conclude our Year in Review series, a huge thank you for welcoming Breakfast News to your daily routine! Our group of wise investors wishes you and your loved ones a fantastic New Year, and -- with markets closed tomorrow -- we'll return to your inbox on Thursday, January 2.
The year 2024 was a significant one for Bitcoin (BTC 3.62%), witnessing not just the continuation of its 2023 surge, but also groundbreaking achievements. By the end of 2024, Bitcoin had scaled from $16,500 to $42,000 in 2023, eventually surpassing $100,000 in early December.
Remarkable as Bitcoin's price increase was, the more significant shift was its entrance into mainstream finance. As 2024 drew to a close, the stage was set for even wider institutional adoption in 2025 and beyond.
The ETF Floodgates are Opened
The US Securities and Exchange Commission's (SEC) approval of spot Bitcoin ETFs on January 10, 2024, marked the end of an 11-year regulatory dispute that started with the Winklevoss twins' initial application in 2013. The market seized the opportunity: The iShares Bitcoin Trust (IBIT 1.49%) quickly emerged as the category's leader, accumulating $5 billion in its first weeks, enough to rank in the top 7% of all ETFs. The trust then grew to over $50 billion by the end of the year.
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This breakthrough revolutionized Bitcoin's accessibility. The traditional ETF format eliminated the technical challenges of cryptocurrency exchanges and digital wallets, which had prevented many traditional investors from entering the market. Moreover, it provided institutional investors with a compliant vehicle, triggering a new wave of demand that propelled Bitcoin to new heights.
The Crypto Industry Joins In
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2024 saw AI chipmaker Nvidia (NVDA -0.39%) garnering headlines, but companies related to crypto, such as MicroStrategy (MSTR 1.83%) and Robinhood Markets (HOOD 1.28%), matched or even surpassed the tech giant's performance in 2024. Bitcoin's outpacing of major stock indexes in 2024 has set the stage for the crypto markets to dominate the news in 2025.
Glancing Forward: Bernd Schmid's Opinion
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Cultivate Realistic Expectations
Bitcoin's potential future role might be as a protection for wealth, rivaling gold. At $18 trillion, gold's market capitalization is 9 times larger than Bitcoin, with 95% of its value stored as wealth in vaults or as jewelry. If Bitcoin manages to capture half of gold's market cap, it could push Bitcoin's price to around $500,000 over the next five years.
Bitcoin$93,733 (+0.56%)
However, it may take much longer. Furthermore, I anticipate multiple 50% to 70% drawdowns, as in 2022 and 2023, which will unnerve emotional investors once more.
Investors should treat Bitcoin as just a component of a well-diversified portfolio, frequently adjusting their exposure. This means establishing a target allocation range, adjusting down when the market takes your holdings beyond the range, and increasing your holdings when the market dips below the range. This pre-set approach can help remove emotion from decision-making when volatility rears its head.
Fun for Fools
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In the realm of finance and investing, 2025 could see a significant rise in the number of individuals and institutions investing in cryptocurrencies, especially Bitcoin, due to its increased accessibility and widespread acceptance in mainstream finance. This shift is largely attributed to the approval of spot Bitcoin ETFs by the US Securities and Exchange Commission in 2024.
Additionally, the success of companies like MicroStrategy and Robinhood Markets, which have closely tied their fortunes to Bitcoin, suggests that the crypto markets could continue to dominate the news in the coming year. This trend could lead to further investments in cryptocurrencies, potentially driving their prices higher.
