“On its way to become digital gold”: What’s next for Bitcoin, and how to play it

Bitcoin enthusiasts have finally seen their long-awaited dreams come true as the cryptocurrency surged past the monumental US$100,000 mark, shattering a US$2 trillion market cap and surpassing the size of the ASX itself.

This milestone capped a monthlong rally in which Bitcoin repeatedly flirted with the symbolic threshold before finally breaking through.

The rally has also captured the attention of our readers, with the Betashares Crypto Innovators and VanEck Bitcoin ETFs climbing to 6th and 7th place among the most-searched fund profiles on Market Index since the U.S. election.

Just as investors question what comes next after milestones like CBA reaching $150 or NVIDIA hitting its first trillion-dollar valuation, it’s time to turn our focus forward. Where does Bitcoin go from here, and how can investors best position themselves for what’s next?

Why is crypto rallying?

Before diving into what’s next for Bitcoin, let’s quickly review the key factors driving the current rally.

One significant catalyst has been President-elect Donald Trump's pro-crypto stance. He has branded himself the "crypto president" and promised to make the US the "crypto capital of the planet" as part of his election agenda. 

His policies focus on easing regulatory hurdles to encourage innovation and adoption.

As Caroline Bowler of BTC Markets noted in her wire, Trump would install pro-crypto regulators soon after getting elected, and appointed Paul Atkins to chair the Securities and Exchange Commission (SEC), a choice widely seen as favourable for the crypto industry.

Another major promise from Trump that has captured market attention is the creation of a national crypto stockpile, akin to how countries maintain reserves of oil, gold, or foreign currency.

“Prominent figures, such as Wyoming Senator Cynthia Lummis … have proposed legislation to allow the US government to purchase 200,000 BTC annually over the next five years. 

This would mark a significant step toward federal adoption of crypto and pave the way for greater institutional involvement,” Bowler explains.

Why could crypto keep rallying?

Monochrome’s Bridget Nichols points to a wide range of Bitcoin price targets on Wall Street, from USD $250K to $13 million over the next decade. She believes that US$250K by the end of 2025 is achievable.

Although Bitcoin remains a volatile and emerging asset class, Nichols argues that it’s “on its way to become digital gold” and may also benefit other well-known cryptocurrencies like Ethereum.

She highlights that, compared to previous market surges, there is now more institutional and professional investor representation, as evidenced by institutional trading (as shown in the chart below) and the rise of in-kind crypto-asset ETFs. 

"For the first time ever, traditional finance can tap into crypto-asset wealth, while crypto-asset wealth can access traditional finance instruments, such as options, leverage, and borrowing," Nichols says.

Fixed supply, untapped potential

Thomas Perfumo, Head of Strategy at Kraken Australia & ROW, adds another factor: Bitcoin’s unique supply characteristics make it well-positioned for continued growth.

"Over 94% of all bitcoins that will ever exist have already been mined. The outstanding supply is growing at an annualised rate of about 0.8%, and this rate is trending downward. 

Bitcoin’s supply is known today, tomorrow, and into the future. When demand is this high, the logical conclusion is positive price action," Perfumo explains.

He also points out that, while only 10% of the world’s population has adopted crypto, two-thirds have access to the internet. As the word spreads and the rally continues, more people are likely to follow the momentum, creating a powerful self-reinforcing cycle.

How to play it?

There are several ways Australian investors can gain exposure to the crypto rally.

• VanEck Bitcoin ETF (ASX: VBTC) offers exposure to Bitcoin’s performance, with shares physically backed by bitcoin and held in cold storage at a qualified custodian.
• Monochrome Bitcoin ETF (CBOE: IBTC) tracks the price of Bitcoin in Australian dollars (before fees and costs) by holding it directly, providing investors with a direct link to the cryptocurrency’s performance.
• Global X 21Shares Bitcoin ETF (CBOE: EBTC) provides holders with an interest in physical Bitcoins (in AUD) held in cold storage by Coinbase. EBTC units are redeemable for Bitcoins.
• The Monochrome Ethereum ETF (CBOE: IETH) offers a diversification option for those looking to expand their crypto exposure beyond Bitcoin and invest in Ethereum directly.
• For a broader play on the crypto economy, Betashares Crypto Innovators ETF (ASX: CRYP) provides 'picks and shovels' exposure to listed equities powering the sector, including those developing digital mining equipment, operating crypto trading platforms, and other services to support the ecosystem.

What are the risks?

As investors watch this rally unfold, many may be tempted to jump on the bandwagon. But it’s important to remember Warren Buffett’s timeless investing principle: “Be fearful when others are greedy and greedy only when others are fearful.”

Cryptocurrencies remain highly volatile, with scandals like FTX and regulatory uncertainty adding significant risk. Even positive news can trigger market bubbles, which may eventually burst and result in substantial losses.

Unlike stocks, which can be valued based on earnings and other fundamentals, crypto prices are often driven by emotional sentiment, lacking tangible assets to support their value. As such, the digital asset market could still be in a bubble, or potentially face one again in the future.

Moreover, any favourable legislation that could boost the market may take longer to pass than expected, and may not live up to the hype when it finally arrives.