Summary Bitcoin's long-term trajectory is compelling despite short-term volatility, with institutional adoption and government interest growing, making it a legitimate alternative to traditional financial stores of value. The market is mispricing Bitcoin due to short-term noise, overlooking fundamentals like ETF evolution, mining cycles, and increasing global financial role. Key industry leaders and institutional players are bullish on Bitcoin, with stock-to-flow models and on-chain data suggesting it's undervalued by at least 50%. Bitcoin's growing institutional adoption and potential for government-backed reserves present a significant upside, with a realistic path to $120,000-$150,000 in 12-24 months. Bitcoin ( BTC-USD ) is one of those assets that sparks strong opinions. Some see it as digital gold, others as a speculative bubble, and the rest as a bit of both. What’s clear though is that it’s not going anywhere. Despite short-term volatility, Bitcoin’s long-term trajectory remains compelling. Right now, there’s a disconnect between its actual adoption and how the market is pricing it. Over the past year, Bitcoin has had its ups and downs. The last two months saw a drop of 23%, but over six months, it’s up 37%. That kind of volatility is exactly what makes Bitcoin so misunderstood. It moves in cycles and people often get caught up in the latest price action instead of looking at the broader picture. With institutional adoption steadily growing and governments starting to take Bitcoin seriously, I believe the current market is missing the bigger story. Bitcoin isn’t just another speculative asset; it’s becoming a legitimate alternative to traditional financial stores of value. That’s why I see Bitcoin as a buy at current levels, with a realistic path toward $120,000 by 2026 and a long-term ceiling far beyond that. Why the Market is Mispricing Bitcoin Markets aren’t always rational, and Bitcoin is no exception. Right now, short-term noise is drowning out the fundamentals. Take the ETF situation, for example. The initial hype around spot Bitcoin ETFs drove the price higher, but once they launched, outflows led to a pullback. Some investors took this as a bearish signal, but that ignores the way new financial products evolve. Early-stage ETF volatility is common, and the fact that Bitcoin ETFs recently broke an outflow streak with $13.3M in new inflows suggests that institutional demand is still growing. Then there’s the ongoing panic about Bitcoin mining costs. Rising electricity prices, regulatory pressure and U.S.-Canada trade tensions have created fears that miners will struggle to stay profitable. While that’s a real challenge, it’s also part of Bitcoin’s natural economic cycle. Historically, inefficient miners get squeezed out, but the overall network remains strong. We’ve seen this before in previous cycles, and every time Bitcoin has come out more resilient. The biggest blind spot in Bitcoin’s current valuation is how little attention is being paid to its growing role in global finance. Governments are increasingly discussing Bitcoin in ways that would have been unthinkable five years ago. Reports suggest that the Trump administration is exploring a U.S. Bitcoin reserve, while other countries are considering adding BTC to their financial systems. These aren’t just theoretical discussions—they signal a shift toward Bitcoin’s broader acceptance as a strategic asset. If sovereign adoption starts happening at scale, the current price will look like a bargain in hindsight. And of course, One of the biggest mistakes investors make with Bitcoin is letting short-term volatility shake them out of the market. Big price drops can feel unsettling, and it’s easy to assume that a steep decline means more downside ahead. But if history tells us anything, it’s that sharp pullbacks have actually been some of the best times to buy. Bitcoin has a habit of dropping 25% or more in a matter of weeks—sometimes even days. When that happens, sentiment tends to turn sharply bearish. Fear takes over and many investors rush to the exits. But time and again, these dips have set the stage for major rebounds. Take a look at the chart below: Has Buying BTC-USD after a 25% Pullback Been a Smart Move Historically? (Author, using Yahoo Finance Data API) Each red dot marks a time when Bitcoin dropped 25% or more. If you zoom out, you’ll notice a pattern—those moments often followed major price surges. The bar chart at the bottom tells an even clearer story: historically, the returns following these pullbacks have been strongly positive, especially over six months to two years. The gray line on the chart tells another important story—it shows how often Bitcoin was worth more after these dips over different time horizons. In the short term, it’s easy to get caught up in the fear. But looking at the bigger picture, these dips have been more like buying opportunities than red flags. The market tends to overreact, but the data makes one thing clear—buying into weakness has been a winning strategy for those willing to wait. What Industry Leaders Are Saying Bitcoin major investors, analysts and financial institutions help shape the narrative. JPMorgan analysts have highlighted concerns about rising mining costs, but they’re still bullish on companies with efficient operations like IREN Limited ( IREN ). That tells you something: it’s not that they doubt Bitcoin’s long-term viability, but rather that they see it as a matter of efficiency and cost structure. High-profile investors like Raoul Pal and Tom Lee believe Bitcoin is set to capture a growing share of the $500 trillion global store-of-value market. While that’s an ambitious claim, it aligns with Bitcoin’s historical trajectory. Meanwhile, U.S. Treasury officials are actively consulting crypto firms about custody solutions, suggesting that the government is preparing for a future where Bitcoin plays a larger role in financial markets. And when Binance’s CEO called Trump’s Bitcoin reserve plan “a good first step” it reinforced the idea that institutional players see Bitcoin’s integration into government policy as inevitable. Taken together, these signals point to a market that’s slowly waking up to Bitcoin’s role as a serious financial asset even if the short-term price action doesn’t always reflect it. Upside Potential Bitcoin doesn’t fit into traditional valuation models, so it requires a different approach. One useful metric is the stock-to-flow ratio, which measures an asset’s scarcity. Bitcoin’s stock-to-flow will double after the 2028 halving, making it even more scarce relative to existing supply. In previous cycles, this dynamic has contributed to massive price surges. Current stock-to-flow models suggest Bitcoin is undervalued by at least 50% with an implied fair value above $120,000. Bitcoin's stock-to-flow (BiTBO) On-chain data further supports the case for a higher price. Long-term holders are at record levels, indicating strong conviction among those who understand Bitcoin’s fundamentals. Bitcoin's Long Term Holder Supply (BiTBO) Exchange reserves are at multi-year lows, meaning fewer coins are available for sale, which historically precedes supply-driven price increases. And miners are holding more Bitcoin than they’re selling, which suggests that those closest to the network expect higher prices ahead. Bitcoin's Exchange Reserve - All Exchanges (CryptoQuant) Market Sentiment and Key Trends Bitcoin’s recent sentiment has been mixed, with bullish and bearish narratives competing for attention. On the positive side, institutional accumulation is still happening despite the initial ETF outflows. Sovereign adoption is gaining momentum, and the news that the U.S. Treasury is exploring Bitcoin custody solutions is a potential game-changer. On the bearish side, regulatory uncertainty remains a headwind. The ongoing discussions about Bitcoin mining tariffs and the costs associated with energy-intensive mining operations are weighing on sentiment. However, these concerns tend to be cyclical and in previous bear markets similar narratives emerged—only for Bitcoin to reach new all-time highs once the dust settled. Risks and Potential Challenges Bitcoin isn’t without risks, and it’s important to acknowledge them. Regulation remains the biggest wildcard. If governments take a harder stance on exchanges, custody providers or mining operations, it could create headwinds. However, the fact that the U.S. government is consulting with crypto firms rather than outright banning Bitcoin suggests that regulation will likely evolve in a way that integrates Bitcoin into existing financial structures rather than eliminating it. Volatility is another challenge. Bitcoin’s price swings are legendary, and it’s not for the faint of heart. That being said, long-term institutional adoption tends to reduce volatility over time, much like what happened with gold as it became a more established asset class. Liquidity is also worth watching. ETF outflows were a concern earlier this year, but now that inflows have resumed, the worst of that selling pressure may be behind us. If institutional demand continues to build, Bitcoin’s liquidity profile will improve, making it a more stable asset over time. Final Thoughts: Bitcoin is a Buy Bitcoin isn’t perfect, but no asset is. What makes it so compelling is that it’s still in the early stages of institutional and sovereign adoption, yet its supply is permanently limited. That’s a rare combination. While short-term traders will get caught up in the latest price swings, those who zoom out can see the long-term trajectory. Between halving, growing institutional adoption and the potential for government-backed reserves, Bitcoin has a path to significantly higher prices. Over the next 12-24 months, I see Bitcoin reaching $120,000 to $150,000 with a long-term ceiling far beyond that if sovereign adoption picks up.
