Bernstein's research analysts released a detailed Bitcoin investing guide that pointed out the rise in institutional involvement in Bitcoin investing, along with the rising role of Bitcoin as a corporate treasury asset.
The report titled ‘From Coin to Computing: The Bitcoin Investing Guide’ also made predictions for the future trajectory of Bitcoin price as well as shed light on the rising market for Bitcoin ETFs. It also stressed the increasing convergence of Bitcoin with AI infrastructure.
Key insights
Institutional Surge in Bitcoin ETFs
According to Bernstein, global asset managers have increased their holdings of Bitcoin and Ethereum ETFs to nearly $60 billion in 2024. In comparison, their holdings stood at just $12 billion in September 2022. It described the launch of Bitcoin ETFs as the most successful in the history of exchange-traded funds, with $18.5 billion in inflows year-to-date since its introduction in January.
"With institutional players flocking to Bitcoin, ETFs are proving to be the entry point for large-scale investment in digital assets," Bernstein stated. The report further noted that ten leading asset managers, including high-profile names, have set up regulated Bitcoin and Ethereum ETFs.
Bitcoin’s Path to $200,000 by 2025
Bernstein is clearly bullish about Bitcoin’s price as the report predicted that the cryptocurrency could reach $200,000 by the end of 2025 on the back of the surge in institutional interest, particularly through ETFs.
To be sure, Bitcoin has already risen by 120% over the last 12 months, with its market cap swelling to $1.3 trillion.
“With institutional adoption accelerating, we expect Bitcoin to triple from its current levels,” Bernstein projects, adding that Bitcoin miners have scaled their computational capacities to match the growing demand.
Bernstein expects that larger financial institutions are anticipated to play a more dominant role as the market matures. The report also hinted that Wall Street could replace Satoshi Nakamoto, Bitcoin's pseudonymous creator, as the top wallet holder by 2024.
The Rise of Bitcoin as a Corporate Treasury Asset
Bitcoin’s rising role as a corporate treasury asset was another central theme in Bernstein’s latest report. It noted that firms like MicroStrategy are leading the charge, with more than 99% of its cash holdings in Bitcoin. MicroStrategy Incorporated (NASDAQ:MSTR)’s strategy of acquiring Bitcoin in large quantities has made it one of the largest corporate holders of the asset. It currently owns 1.3% of the total supply.
The report also pointed to Bitcoin’s superior returns on the back of exposure through equities such as MicroStrategy, as opposed to holding the asset directly or via ETFs. “We view MicroStrategy as an active leveraged Bitcoin equity strategy,” said Bernstein.
Consolidation in the Bitcoin Mining Industry
The Bitcoin mining industry is witnessing a slew of consolidations, with major players like Riot Platforms (NASDAQ:RIOT), CleanSpark (NASDAQ:CLSK), and Marathon acquiring smaller miners. The report noted how industrial-scale mining operations are increasingly dominating the space by acquiring smaller, less organized mining outfits. Bitcoin miners are consolidating to manage at least 20 gigawatts of global power supply, according to the report.
This shift towards large-scale mining operations is likely to continue, with leading miners also expanding into AI data centers. “We expect leading miners to amass 30% of Bitcoin’s total hashrate by 2025,” Bernstein stated.
Bitcoin Mining’s Role in the AI Revolution
Bernstein’s report also explored the synergy between Bitcoin mining and AI infrastructure, as miners provide a unique advantage to data centers by offering access to large-scale power. Bitcoin miners are evolving into essential partners for AI data centers as they capitalize on excess energy capacity and offer efficient solutions for high-performance computing.
“Miners present an energy arbitrage opportunity, trading at $2-4 million per megawatt, compared to $30-50 million per megawatt for legacy data centers,” Bernstein noted. Core Scientific is one such example, executing a multi-billion-dollar deal to develop AI data centers alongside Bitcoin mining operations.
The Future of Bitcoin ETFs and Mainstream Adoption
Bernstein predicted that ETF adoption for Bitcoin will outpace that of traditional assets, as the logistical challenges of self-custody for retail investors push more capital into regulated investment vehicles.
The report also predicted that Bitcoin’s market cap could expand from its current $1.3 trillion to over $3 trillion by the end of 2025, as wealth management platforms, pension funds, and registered investment advisors increasingly allocate assets to Bitcoin.