Can the price of Bitcoin exceed US$840,000? Wall Street Effect!

Bitcoin prices are expected to be in the range of US$250,000 to US$840,000

If capital inflows from the traditional financial world accelerate over the next three to five years, Bitcoin prices could reach between US$250,000 and US$840,000. A new adopted model developed by River suggests that significant price fluctuations in the future may come not only from cryptocurrency investors, but more likely from professional portfolio managers and Wall Street Capital.

The basis of this model is that on a global scale, Bitcoin holding rates are still at very low levels. Currently, only about 4% of the global population holds any amount of Bitcoin, and Bitcoin accounts for a very limited proportion of the vast asset pools managed by large financial institutions.

This means that if institutional investors start allocating small proportions of Bitcoin in their portfolios, the crypto market could generate large new capital inflows.

Can small portfolio allocation bring trillions of dollars in capital inflows?

River's model is based on the assumption that over time, 20% to 40% of the global investment portfolio may allocate 2% to 4% of its assets to Bitcoin. These ratios are generally consistent with the Bitcoin allocation recommendations recently provided to investors by large financial institutions.

Some institutions have begun to evaluate the allocation of 1% to 7% portfolio ratios for Bitcoin. Considering that the total size of global financial assets is approximately US$333 trillion, even a small proportion will translate into a huge number.

If the above assumptions are true, Bitcoin could see a net capital inflow of approximately US$1.3 trillion to US$5.3 trillion. Because Bitcoin has a fixed supply structure, its supply cannot expand like stocks or certain commodities when faced with new demand, which is an important factor in this calculation.

Why are financial advisers increasingly interested in Bitcoin?

In recent years, the traditional financial industry has gradually increased interest in Bitcoin. The proportion of financial advisers engaged in cryptocurrency investment or providing digital asset allocation services to clients will increase to 22% in 2024 and 32% in 2025.

In addition, 56% of advisers said they plan to increase the allocation of Bitcoin or other crypto assets in the future or are considering this option. These data suggest that although adoption in professional investment management is still in its early stages, there is huge growth potential.

Of the 30 largest investment advisory companies registered in the United States, 29 now invest directly or indirectly in Bitcoin. Despite this, the average Bitcoin allocation among these institutions is only about 0.10%.

This ratio suggests that Wall Street is not completely away from Bitcoin, but current positions are still very limited compared to the total capital it manages. Therefore, even a small increase in allocation in the future may have a significant impact on Bitcoin prices.

Why may Bitcoin prices rise higher with every new dollar?

Another significant point of the model is that every dollar of capital that goes into Bitcoin can increase the total market value by approximately $3. This method is derived by analyzing Bitcoin's capital inflows and market value changes in previous market cycles.

In the past cycle, for every $1 net inflow of Bitcoin, the market value has increased by approximately $4.50,$3.30, and $3.10, respectively. To make a more cautious calculation, River adjusted this ratio to three times.

Using this multiplier, new capital inflows between US$1.3 trillion and US$5.3 trillion could push Bitcoin's total market value up to a range of approximately US$5.5 trillion to US$17.5 trillion.

If this happens, the price of Bitcoin could reach levels of US$250,000 to US$840,000. However, this forecast should not be regarded as a firm price target. Institutional adoption may slow, portfolio allocation may be lower than expected, or the historical relationship between capital inflows and market value may weaken over time.

Still, the current landscape shows remarkable potential. As Wall Street's advice on Bitcoin continues to increase, most global investment portfolios are not yet allocated or only a very small proportion of Bitcoin is allocated.

This content does not constitute any investment advice. Markets have high risks, so please conduct independent research before making investment decisions.