Bernstein research analysts have released a detailed guide to investing in Bitcoin that points to the rise in institutional participation in Bitcoin investment, along with Bitcoin’s growing role as a corporate treasury asset.
The report, titled “From Currency to Computing: A Bitcoin Investment Guide,” forecasts the future trajectory of Bitcoin’s price, highlights the rise of the Bitcoin ETF market, and emphasizes the growing convergence between Bitcoin and AI infrastructure.
Key Insights
Institutional Boom in Bitcoin ETFs
According to Bernstein, global asset managers have increased their holdings of Bitcoin and Ethereum funds to nearly $60 billion in 2024. By comparison, their holdings were just $12 billion in September 2022. She described the launch of the Bitcoin ETF as the most successful in the history of ETFs, with inflows reaching $18.5 billion since its launch in January to date.
“As institutions flock to Bitcoin, ETFs have proven to be the entry point for broad-based investment in digital assets,” Bernstein said. The report also noted that ten major asset managers, including high-profile names, have created Bitcoin and Ethereum ETFs.
Bitcoin's Path to $200,000 by 2025
Bernstein is clearly bullish on the price of Bitcoin as the report predicts that the digital currency could hit $200,000 by the end of 2025 on the back of increased institutional interest, particularly through exchange-traded funds.
Bitcoin has certainly risen 120% in the past 12 months, taking its market cap to $1.3 trillion.
“As institutional adoption accelerates, we expect Bitcoin to triple from current levels,” Bernstein predicts, adding that Bitcoin miners have expanded their computational capabilities to keep up with the growing demand.
Bernstein expects major financial institutions to play a more dominant role as the market matures. The report also hints that Wall Street could replace Satoshi Nakamoto, the pseudonymous creator of Bitcoin, as the largest wallet holder by 2024.
Bitcoin's Rise as a Corporate Treasury Asset
Bitcoin’s growing role as a corporate treasury asset was another key theme in Bernstein’s latest report. The report noted that companies like MicroStrategy are leading the way, with over 99% of their cash holdings in bitcoin. This strategy of acquiring bitcoin in large quantities has made it one of the largest corporate holders of the digital asset. It currently owns 1.3% of the total supply.
The report also noted the superior returns of bitcoin in the form of indirect exposure through stocks like MicroStrategy, rather than holding the asset directly or via ETFs. “We view MicroStrategy as an active leveraged bitcoin equity strategy,” Bernstein said.
Integration into the Bitcoin Mining Industry
The Bitcoin mining industry is witnessing a significant number of consolidations, with major players such as Riot, CleanSpark, and Marathon acquiring smaller mining companies. The report notes how industrial-scale mining operations are increasingly dominating the space by acquiring smaller, less regulated mining companies. According to the report, Bitcoin mining companies are merging to manage at least 20 gigawatts of global power supply.
This shift toward large-scale mining operations is likely to continue, with leading mining companies also expanding into AI data centers. “We expect leading miners to collect 30% of the total Bitcoin hash rate by 2025,” Bernstein said.
The Role of Bitcoin Mining in the AI Revolution
The Bernstein report also explores the synergy between Bitcoin mining and AI infrastructure, with miners providing a unique advantage to data centers by providing access to power at scale. Bitcoin miners are evolving into essential partners for AI data centers, leveraging excess power capacity and providing efficient solutions for high-performance computing.
“Mining companies offer an opportunity to arbitrage energy, trading at $2-4 million per megawatt, compared to $30-50 million per megawatt for legacy data centers,” Bernstein noted. One example is Core Scientific, which is in a multibillion-dollar deal to develop AI data centers alongside its bitcoin mining operations.
The Future of Bitcoin ETFs and Their General Adoption
Bernstein predicted that adoption of Bitcoin ETFs will outpace adoption of traditional assets, as the logistical challenges of self-custody for individual investors push more capital into regulated investment vehicles.
The report also predicts that Bitcoin's market cap will expand from its current $1.3 trillion to more than $3 trillion by the end of 2025, as wealth management platforms, pension funds, and registered investment advisors increasingly allocate assets to Bitcoin.
