$3 Million Bitcoin: This Just Triggered Next Super Rally (Uncut) 04-14-2025

$3 Million Bitcoin: This Just Triggered Next Super Rally | VanEck’s Matthew Sigel

Can you tell us your prediction, short term, long term, maybe 2025 and 2026? Russia did a trade with China, partially denominated in Bitcoin, beginning to really use Bitcoin for the first time as a medium of exchange. And that’s not for individuals buying coffee, that’s for large scale transactions where countries are using Bitcoin as an intermediary currency to do, say, an oil trade. And in that scenario, where Bitcoin denominated trade could be, say, 5% of global trade, we get to… We’re getting the outlook for Bitcoin and the larger crypto landscape with our next guest, Matthew Siegel.

He’s the head of digital asset research at Bennett. Good to see you again, Matthew. Welcome back.

I’m David Lin. I’m Bonnie. People love your Bitcoin price prediction.

Can you tell us your prediction, short term, long term, maybe 2025 and 2026? Sure. Yeah, we’ve been really encouraged by the interest from the traditional asset management community into Bitcoin ETFs, especially since the election. My inbound phone calls are up like 300% from investment advisors who were afraid to allocate to Bitcoin ETFs.

And now with the election and the change in administration, they’re much more open to discussing the investment case for Bitcoin. So this is obviously a very volatile asset. And so we look at the short term, it tends to be driven by macro considerations, liquidity trends and technicals.

So assuming that Bitcoin can get through this period of uncertainty, which we think is macro driven, interest rates come down, the Fed gets a little easier. We think the second half of the year should be quite positive and that Bitcoin could reach 180,000 per coin. That’s based on an analysis of previous Bitcoin cycles, which have tended to get smaller over time.

But the previous smallest Bitcoin cycle was a 20x return from the trough to the peak. If we can do a 10x return this cycle, that would imply 180k. So that’s kind of our guidepost for this year.

Again, liquidity and technicals could change that, but that’s my base case is 180k for this year. For those advisors taking a longer term perspective, we benchmark Bitcoin against gold, specifically the 50% of the gold market that is more speculative in nature. So about half of gold goes into jewelry or industrial use cases.

Putting that aside, if Bitcoin can reach the 50% of gold that’s speculative in nature, that would imply roughly 450,000 per coin. So I know a lot of folks are calling for that this year. That would mark a break in that cycle.

Each cycle gets smaller for Bitcoin. So I have a hard time calling that for this cycle, but that could be maybe a 20, 27, 20, 28, 450 per coin. And then over the longer term, we think there’s a good chance that central banks and sovereign wealth funds will start to get more aggressive in adopting Bitcoin, not only as a store of value, but also as a medium exchange.

So this year, the Czech Republic, the governor of the central bank there has initiated a study to analyze Bitcoin for inclusion in their central bank reserves. And then just this week, Russia did a trade with China, partially denominated in Bitcoin, beginning to really use Bitcoin for the first time as a medium of exchange. And that’s not for individuals buying coffee.

That’s for large scale transactions where countries are using Bitcoin as an intermediary currency to do, say, an oil trade. And in that scenario where Bitcoin denominated trade could be, say, 5% of global trade, we get to a $3 million price per Bitcoin. That’s a long term prediction, like 2050.

But that’s going to be necessary, we think, to elevate Bitcoin into the millions per coin. You said we want to get to 5%. Where are we now? Zero.

So basically, nobody is using Bitcoin in global trade. There’s a small amount of remittances that are going on. But think of that as a gift, where one person is just sending value to another.

But to do something where you’re trading oil, but using Bitcoin as the intermediary currency, there’s basically none of that going on. So I think this week’s action by Russia is a zero to one moment in terms of launching Bitcoin as a medium of exchange. That’s because Bitcoin is very easy for people to understand.

It’s digital gold. But what about Ethereum and Solana? They have ETFs. Do people understand them? How are they performing? Yeah.

In contrast to those inbound phone calls from advisors who want to talk about Bitcoin, we have not really seen the same curiosity or bullishness on some of the altcoins. I think a lot of that comes down to performance. They’ve been underperforming.

Another part is related to the use case. So much of it is kind of speculative in nature. We haven’t really seen the transmission mechanism whereby stablecoin AUM starts to generate meaningful fees for, say, Ethereum token holders or Solana token holders.

I think some of that is still ahead of us as deregulation kicks off in the US. It’s actually pretty hard to buy Solana based USDC if you’re here in New York state. The regulator just makes it very difficult.

So as those regulations ease, we’re optimistic that some of those real world use cases can kick off. But right now, with the oversupply in tokens, with meme coins kind of sucking up some of the liquidity, it’s definitely a bear market in the altcoins. Do you think that’s going to change? I think it will once a significant quantum of Bitcoin wealth has been created.

So the history, the asset class is once Bitcoin can kind of pump 30 to 50 percent, then a lot of those gains get recycled into newer projects. There’s just been too many newer projects and Bitcoin’s down flat year to date. So I do think when these ETFs come to market, when staking is permitted, when you can create and redeem these ETFs using in kind, so the coins themselves, not just cash, that means every broker dealer in the US is going to be need to touching crypto directly.

That means that they’re more likely to hold some for working capital purposes. And the coins that maybe have lower inflation rates could see good performance. Yeah.

You talked about the crypto bull cycle this year going back to markets in one of your recent reports. Peak in Q1, setting new highs in Q4, 30 percent retracement in BTC. Is that what’s happening right now, the 30 percent retracement? Is that the period we’re in right now? I think it is.

1. So we’ve already hit the peak in Q1. Is that kind of the rationale? Yeah.

I mean, our initial idea was that the inauguration would prompt a blow off top to say 125. Then the reality would set in. Governing is hard.

Deregulation is hard. There’s many interests that will fight against it. And you’d have a drawdown in kind of Q2, Q3 before a subsequent rally.

So we never hit that 125K. Instead, we just got the drawdown. I think we should remember in 2021, there was a 54 percent Bitcoin drawdown from the March peak until the October peak.

So it feels like we’re in a period kind of like that. You talked about a Bitcoin strategic reserve in this report. This was written before Trump announced a crypto strategic reserve signed into executive action a couple of weeks ago.

How does that change the calculus for your forecast for some of the larger layer ones? I think it’s in line with our expectations. The U.S. government is very unlikely to acquire altcoins in the open market. My reading of the executive order is that it allows for the government to hold on to whatever altcoins may be seized, but it also gives them the freedom to sell them if they want.

We could have a scenario where the government is selling altcoins and buying Bitcoin because the strategic reserve for Bitcoin explicitly lays out a scenario where the government is acquiring Bitcoin in the open market, albeit in a revenue neutral model. So maybe that means selling alts and buying Bitcoin. But I wouldn’t say that we’ve become more bullish on alts because of the stockpile that was announced.

Would you be more bearish because they can now sell a big amount? Government doesn’t own too many altcoins. So I don’t think that, I mean, symbolically, it might be negative if they were to sell them. I don’t think it would mean too much for supply demand.

And, you know, many of these tokens are down 50, 60 percent. So at this point, risk reward feels to me more bullish than bearish. So earlier you mentioned the crypto waterfall where Bitcoin rallies first and then small caps.

So that in the crypto community is the four-year cycle. So a lot of people do not believe in four-year cycle. I would assume that you believe it.

I believe it, but I’m willing to change my mind if it doesn’t play out. If 2025 is a down year for Bitcoin, that would probably invalidate the four-year cycle and prompt me to rethink it. It’s not the only variable, but it’s one piece of the matrix that I do tend to trust until proven otherwise.

I hope it happens. Well, let’s talk about some Bitcoin companies or crypto companies overall that you like. What are some of the bulk cases for holding on to a crypto company versus just the layer one itself? Yeah.

So we’ve actually been doing a lot more work in the equity space this year. Part of the reason for that is that we saw that the 2024 vintage of altcoins was not designed particularly well. They were either meme coins with no utility and no pass through, or they were kind of layer twos with a lot of inflation and no logical buyer.

In contrast, the equity universe just doesn’t have the same amount of inflation, right? So if you look at the available supply of equities that are geared to Bitcoin and digital assets, right now it’s roughly $200 billion of stocks. A lot of that is Coinbase, MicroStrategy, and then the Bitcoin miners. And there are a number of IPOs that we’re expecting this year.

Some of them are here in this room. I saw Gemini, for example, with a booth. But even if you were to add up all of the market cap of those companies that might come public this year, it’s maybe $20 billion.

So $20 billion on a base of $200 billion, it’s not a huge amount of supply. As long as these companies are profitable, we think that they could have some valuation support. And we’ve seen the performance of companies that just add a little bit of Bitcoin to their balance sheet.

Sometimes the best performing stocks are not the pure plays. They’re the companies that have, say, 1% exposure to crypto and it’s going to 5%. And Robinhood would be a good example of a company like that.

Their crypto exposure a couple of years ago was de minimis. Now it’s almost 30% of the business. And Robinhood has been able to use that kind of innovation on digital assets to capture other customers, and it’s helping their multiple.

So we’ve been doing a lot more work among those, what I’d call trad-fi enablers, traditional institutions that are getting more aggressive to embrace the innovator’s dilemma rather than push against it. And you should see some more funds from us in that space over the next quarter. Did you say small percentage of Bitcoin, like all the companies doing that perform better than companies that have a huge amount of Bitcoin on their balance sheet? I guess what I’m saying is that when a company kind of goes from zero to one, that can move the needle a lot on how the market perceives them and what type of multiple they’re willing to pay for the stock without introducing a ton of additional volatility.

Whereas some of these Bitcoin miners, for example, they are already pure plays in Bitcoin. Then they go and borrow money to add more Bitcoin to their balance sheet. That makes them extremely volatile.

And the market often doesn’t pay a huge multiple on the earnings. So we’re thinking to broaden the investment universe away from just, let’s say, 20 pure plays to include the hundred or so companies that are doing something with digital assets. The backtesting shows much better performance at the portfolio level.

Could you share your outlook of 2025 and 2026? Are we heading into a recession? Everyone’s worried about the tariffs. What’s happening? Yeah, this is a digestion period for macro observers. The uncertainty around the administration’s approach to tariffs caused a pull forward of economic activity.

So lots of companies bought goods from overseas in Q4 before the tariffs would go into effect. And as a result, Q4 GDP was overstated. And there’s a bit of an air pocket in Q1 GDP.

And as the market woke up to that, GDP estimates fell, earnings estimates fell. And US, specifically US tech, has started to underperform dramatically the rest of the markets. And because Bitcoin and other digital assets have been reasonably highly correlated to US tech, they got hit as well.

Our reading of some of the sentiment indicators shows that last week there really were some kind of peak fear indicators in the market. And so we’re optimistic that there’ll be a rebound in Q2. The market will get more certainty around the tariffs.

And this was more of a one time than a persistent negative impact on GDP. Because even if we get tariffs, there’s going to be a deregulation agenda out of this administration. There’s going to be tax cuts.

The second half of the year looks a lot better from our perspective. So still pretty bullish. Maybe more even equity performance where US tech is not such an outperformer.

But given that Bitcoin’s correlation with tech has fallen quite a bit compared to 2022, I think there’s a reasonable chance for a decoupling. Still sticking with Bitcoin 180 in Q4 this year. What about equity market though? Earlier you said people already started buying goods Q4 last year.

And does that mean it’s priced in? Well, they stockpiled inventories in Q4 to not have to pay tariffs that would come into effect in Q1. So they knew? Yeah, they knew. Trump said it on the campaign trail many times.

But those inventories are not going to last them for two years, right? They might last for two quarters. People will be back in the market. The tariffs will be a one time hit.

Sentiment will come back as the tax cuts get passed, hopefully mid-year. And the second half should be better. You have an interesting panel at this conference.

It’s entitled Building Empirical Valuation Frameworks for Digital Assets. This is an interesting topic because we think about let’s say Bitcoin, for example, people think it’s digital gold. Gold is a commodity.

There’s no DCF, there’s no discounted cash flow you can use to value gold. There’s no DCF to value Bitcoin. How do you know if Bitcoin or any other layer one is fairly valued at any given point? Yeah, I mean, so for Bitcoin, the empirical model is a comparative one.

And I think that your observation is correct that there’s no discounted cash flow model you can build. It’s all based on what it’s perceived value. That’s different from some of the proof of stake networks like Ethereum and Solana, where the level of complexity in the transactions is much higher.

You can build these logical loops, if A, then B. And users have proven that they’re willing to pay for those transactions. And the fees that users pay end up in the token holder’s pocket in some way or another. Whereas for Bitcoin, the fees that users pay end up in the Bitcoin miner valuation.

So you can build DCFs for some of these layer one tokens. I don’t think that they have much predictive ability as to how the token trades. This is retail driven market, driven by flows and sentiment and vibe.

But for kind of longer term investors, these DCFs, discounted cash flow models, can at least establish some kind of scenario analysis. What type of fees would have to be paid on the blockchain over what time period to justify the price of the asset? When I was in college, I had a finance class and one of my profs asked us if we were to recreate dinosaurs and dinosaurs were to be born again, like Jurassic Park, how much would you buy a dinosaur for? I think the basis of the question is, is a completely new asset that no one’s ever seen before. How do we know how much to pay for it? And when cryptos first hit the mainstream media, I think that was kind of the sentiment.

No one knew what Solana was. It’s like, how do we know? How do we know how much to pay for it? How do you approach a new coin or a new layer one that just enters the market? Yeah, we typically won’t buy most new coins and most layer ones that enter the market. We’re passing on 99.9% of tokens.

We’re looking for doxed teams. So, you know, not anonymous teams, but great dox teams building products that are better than the TradFi analog, where there’s some value capture mechanism in the token, where the fees that user pays can end up in the pockets of token holders. And that shrinks the investable universe dramatically.

And then we also find that a lot of tokens come to market just too expensive compared to those TradFi analogs. So we’d like to watch the token as it comes to market, typically may have some pump driven by retail interest that marks a top. And then the token goes down 90%.

And we’re looking to buy it when it’s in that trough of disillusionment, where the valuation is much lower. But in the end, it is the discounted cash flows, which should form the bedrock of a token’s value. I know Bonnie and many other people in the space were disappointed at Ethereum this year.

Because of the model. Earlier, you said the capturing of revenue. Ethereum is not really doing that now because they are sharing the revenue with their L2s.

And we are hoping that it’s going to change. Your thoughts? I agree with that diagnosis. Sometimes when you’re trying to seed an ecosystem, it helps to be generous.

And I think that’s kind of the approach that the Ethereum Foundation has taken with the L2s is that they want to get as many out there as possible to try to find product market fit. It hasn’t been tremendous that some of these L2s are accepting stablecoins as gas, right? You really want to see the Ethereum ecosystem aligned, whereby ETH is the unit of account and ETH is used for gas. And I think the governance of the Ethereum and the Ethereum Foundation is kind of recognizing this in their own decentralized fashion.

And we will see a more Ethereum aligned ecosystem of L2s over the next couple of years. And maybe that will reinvigorate the token price. Would you say you’re still bullish on Ethereum long term? Bullish, yes.

Maybe our position sizes are smaller than they used to be. And some of that has been through performance. And I do want to see the Ethereum Foundation and the key opinion leaders in Ethereum be more vocal about why the token is good.

We often say it on our team, the token is the product. It sounds crass, but this is a retail driven market and you have to make the case that your token is great. And maybe people were too proud to do that or I don’t know the reason, but it seems like there are some changes in how those leaders are approaching the token.

Somebody said the global financial system will be built on Ethereum and they’re looking forward to a 24-7 equity market, maybe on-chain. What is your thought? Well, if you look at the stablecoin issuers, very few of them are on one chain, right? They’re on lots of different chains. And those stablecoin issuers almost become the bridge between lots of L1s.

So I do agree that Ethereum has kind of the most traction in the banking system, many of whom have forked Ethereum or who are experimenting on the open source blockchains. But I think it’s going to be a multi-chain world. And I think one thing that we should be on the lookout for from this SEC are some no-action letters that might allow tokenized equities to trade on decentralized exchanges without a broker-dealer license.

That would be a big deal. I think that Hester Peirce wants to see that from an ideological perspective. But you’ll know it before it happens because they will issue some no-action letters giving these exchanges kind of permission to go ahead and try it.

How soon will we see that, you think? Maybe by the end of the year. But there’s a lot of steps to get to. So Hester Peirce, three weeks ago, put out a list of 50 questions for the industry to answer.

And a lot of them are around custody and staking and what it means to be a broker-dealer in the space. And those questions are still being answered. They’re really detailed.

And I know from sitting on some advisory committees of industry associations that the answers are still being collated, have not even been submitted to the SEC yet. And I think that’s why the SEC delayed the approval of in-kind creation and redemption for some of these ETFs, have pushed the approval of some of the altcoin ETFs. We’ve got to get these questions answered first and it’s going to take a couple quarters.

My final question, and then maybe Bunny has another one. What would derail your bullish crypto outlook for 2025, 2026? What macro events would need to happen for you to say we’re not hitting new all-time highs anymore? Well, if we got a big rally up to $107k, let’s say, so short of the all-time high, and it was accompanied by a lot of froth in the market that we would identify as topping signals, say like Coinbase or Phantom app downloads and funding rates and DeFi spiking, like very high unrealized profits in Bitcoin, but we failed to make new all-time highs, that would be probably pretty bearish. I guess another one would be a re-acceleration in inflation that might compromise risk assets generally.

Probably those two things. If you were a 30-year-old, have $100k sitting on the sideline, how would you invest now? A 30-year-old. Okay, so this is not investment advice, but I would probably put like 85% or 90% into stocks, index funds or whatever high conviction equities, and then 10% or 15% into Bitcoin and digital assets.

And Bitcoin would probably be three quarters of that. And I would spread out my purchases because this is a very volatile asset. So it’s helpful to buy a little bit every day or a little bit every week, rather than trying to pick a bottom with one big trade.

You know what they say, if you try to pick bottoms, you end up with smelly fingers or whatever they say. So that would be my advice. Excellent.

Thank you very much, Matthew. I appreciate you joining us. Thank you.