After accurately predicting that Bitcoin will hit $100,000 this year, Standard Chartered analysts are bullish again: it will hit $200,000 by the end of next year.

Standard Chartered believes that Bitcoin investment capital flows this year have been dominated by institutional investors and will continue to maintain or exceed this year's levels next year. After the Trump administration takes office, U.S. pension funds are expected to increase their allocation of Bitcoin. If the United States establishes a strategic reserve fund for Bitcoin, it will also attract global sovereign wealth funds to allocate Bitcoin.

On Thursday, December 5, Bitcoin rose above $100,000 for the first time in history. When Bitcoin was trading at about $27,000 in April last year, Geoffrey Kendrick, Standard Chartered Bank's head of emerging market foreign exchange research and cryptocurrency research, accurately predicted that the currency price would reach $100,000 by the end of this year. Now that Bitcoin has exceeded the 100,000 mark, Kendrick is further optimistic about the market outlook. It is expected that the price of the currency will rise to about 200,000 US dollars by the end of next year as institutions may increase investment in Bitcoin.

Kendrick believes that Bitcoin’s surge to $100,000 this year is mainly due to the strong support of institutional investors. Throughout 2024, Bitcoin investment capital flows have been dominated by institutional investors. Standard Chartered expects this situation to continue in 2025, helping Bitcoin reach Standard Chartered’s target level by the end of 2025: approximately $200,000. At the same time, further absorption by U.S. pension funds and/or sovereign wealth funds will make Standard Chartered more optimistic about currency price increases.

Specific to institutional capital flows, since the beginning of this year, institutions have purchased a large amount of Bitcoin through the spot Bitcoin ETF listed in the United States and MicroStrategy, a software company that is a major Bitcoin holder and is regarded as a stand-in for Bitcoin, with net purchases reaching 683,000 Bitcoins. Among them, the inflow of 245,000 Bitcoins occurred in the weeks after the US election.

These capital flows are undoubtedly the driving force behind Bitcoin’s surge and breaking through the 100,000 mark. What will happen in the future?

Kendrick’s report stated that by 2025, Standard Chartered expects institutional fund flows to continue to maintain or exceed the rate of inflows into Bitcoin in 2024. MicroStrategy is moving ahead of the company's plan announced in late October to raise $42 billion to buy Bitcoin over the next three years, so MicroStrategy's purchases in 2025 should match or exceed the size of its purchases in 2024.

Regarding U.S. Bitcoin ETFs, Standard Chartered noted from the 13F filing submitted to the SEC that pension funds’ reported holdings accounted for only 1% of the nine new Bitcoin ETF shares.

Standard Chartered expects that with the regulatory changes after the Trump administration comes to power, the traditional financial industry will become easier to participate in investing in digital assets. In 2025, the proportion of Bitcoin ETFs held by the above-mentioned pension funds will increase. Allocating even a small portion of the $40 trillion in U.S. pension funds to Bitcoin would significantly push up the price of the currency.

In this context, Standard Chartered believes that the Bitcoin target price of around US$200,000 by the end of 2025 is achievable. If U.S. pension funds, global sovereign wealth funds (SWF) or the possible U.S. Strategic Reserve Fund absorb Bitcoin faster, Standard Chartered will be more optimistic about currency price performance.

Kendrick mentioned in the report that Standard Chartered has previously pointed out that the U.S. government may establish a strategic reserve fund for Bitcoin. Standard Chartered believes that the probability of the fund coming out is low, but once it comes true, it will have a great impact. In addition to creating a new buyer for the small asset class of Bitcoin, the Strategic Reserve Fund may also provide cover for other SWFs to also buy Bitcoin, or disclose that those funds have purchased Bitcoin.

Kendrick reported that when Trump mentioned the possibility of a Bitcoin Strategic Reserve Fund in July this year, the US government held 210,000 Bitcoins, accounting for approximately 1% of the total Bitcoin supply. Considering the size of global foreign exchange reserves and the relatively small total market capitalization of Bitcoin, Standard Chartered believes that the Strategic Reserve Fund is an important driver of upward currency prices.

Even if foreign reserve managers only allocate 1% of funds to Bitcoin, the amount will be very large and may significantly push up the price of Bitcoin.