As the United States grapples with rising fiscal instability and mounting debt, Bitcoin is emerging as a preferred hedge, with analysts forecasting a meteoric rise in its price. According to Bitwise Asset Management, the world’s largest cryptocurrency could soar to $200,000 by the end of 2025, with its fair market value potentially hitting $230,000. This bullish outlook is backed by a confluence of macroeconomic triggers, surging demand from institutional players, and accelerating adoption of crypto investment products like ETFs.
Below, we break down the key catalysts fuelling Bitcoin’s rally and the broader implications for crypto markets.
US Debt Crisis and BTC Scarcity
The latest Bitwise report, authored by researchers André Dragosch and Ayush Tripathi, outlines how growing structural imbalances in the Bitcoin market are contributing to a supply-demand mismatch. The Bitcoin network produces just 165,000 new BTC annually, while demand from spot Bitcoin ETFs, corporations, and even sovereign entities is rapidly outpacing this supply.
As the U.S. grapples with inflation pressures and a widening federal deficit, Bitcoin’s fixed supply and decentralised structure offer a compelling alternative to traditional fiat-backed assets. Bitwise analysts argue that this scarcity makes Bitcoin uniquely positioned to benefit during periods of fiscal uncertainty.
Technical signals also support this thesis: the Optimized Trend Tracker (OTT), a key technical indicator, recently turned bullish for the first time since mid-2024, potentially signalling the beginning of a major breakout.
Institutional Appetite Accelerates with GameStop and ETFs
Institutional adoption is playing a significant role in Bitcoin’s upward trajectory. A growing number of public companies are now adding Bitcoin to their balance sheets. Bitwise reports that 79 listed firms now hold over $57 billion worth of BTC, a 160% surge year-over-year. This trend is being driven by a desire to hedge against inflation and diversify away from U.S. Treasury holdings.
One notable example is GameStop, which recently acquired nearly 5,000 Bitcoin as part of its strategic pivot into the crypto space. In tandem, Bitwise launched a covered call ETF focused on GameStop (ticker: $GMEY), designed to capitalise on the stock’s volatility while offering income through options strategies.
“Crypto and GameStop share one thing in common volatility,” said Bitwise CIO Matt Hougan. “And the beauty of covered call strategies is that they turn volatility into income.”
This latest ETF adds to Bitwise’s growing suite of innovative products, including those tied to MicroStrategy and Coinbase, with more in the pipeline.
GENIUS Act May Reshape Crypto’s Future
Beyond market dynamics, regulatory clarity is proving equally critical to Bitcoin’s potential rally. The U.S. Senate has recently advanced the GENIUS Act, a bipartisan stablecoin bill that could lay the foundations for comprehensive crypto legislation.
Hougan described the bill as “the most important regulatory development in crypto’s history,” even more impactful than the SEC’s approval of spot Bitcoin ETFs in January 2024. The GENIUS Act aims to formalise how stablecoins are issued and regulated, providing much-needed legal certainty in an industry long governed by patchy executive orders and interpretations.
Moreover, stablecoins have become major purchasers of U.S. government debt, making their regulation not only a matter of crypto market stability but also a national fiscal interest. Hougan believes political momentum is on the bill’s side, especially with growing Treasury dependency on stablecoin liquidity.
Bitcoin in Portfolios: High Reward, Lower Risk
One of the most compelling arguments in favour of Bitcoin’s growth is its evolving role in diversified portfolios. A Bitwise study comparing traditional 60/40 stock-bond portfolios with those that included 5% to 10% Bitcoin revealed a surprising outcome: portfolios with Bitcoin exposure outperformed on a risk-adjusted basis without significantly increasing overall volatility.
“The old days of 60/40 portfolios are over,” said Hougan. “Modern investors need to think in terms of stocks, cash, and crypto, adjusting the risk according to market conditions.”
This perspective aligns with the broader institutional shift toward crypto as a legitimate asset class, not just a speculative play. Bitwise currently offers spot Bitcoin and Ethereum ETFs, with pending applications for Solana, XRP, and Dogecoin ETFs awaiting SEC approval. The growing variety of regulated products gives investors safer and simpler access to digital assets.
A Crypto-Driven Financial Reset?
As fiscal strains mount in the U.S., Bitcoin stands at a critical intersection of macroeconomics, market demand, and regulatory transformation. With Bitwise projecting a $200,000 price target within the next 18 months, the cryptocurrency’s future appears to be tied not just to hype, but to deeper structural shifts in the global financial system.
