Bitcoin, once hailed as the "hottest trade" of 2025, has experienced a significant pullback, prompting analysts to reassess its near-term potential. Alex Thorn, Galaxy's head of research, suggests that while Bitcoin's long-term fundamentals remain strong, a shift in market dynamics has led to a decrease in its price target.
Galaxy Digital has adjusted its year-end Bitcoin price target to $120,000, a considerable reduction from the initial $185,000 forecast. This revision comes in the wake of Bitcoin's drop below $100,000, a level not seen since late June. Despite this correction, Thorn maintains that if Bitcoin can sustain the $100,000 level, the overall bull market structure, which has lasted almost three years, will remain intact. However, he cautions that future gains may occur at a more moderate pace.
Several factors have contributed to Bitcoin's recent underperformance. One significant aspect is the redistribution of Bitcoin from long-term holders to institutional investors and ETFs. Galaxy estimates that around 470,000 Bitcoin, worth approximately $50 billion, have been moved from older wallets to meet institutional demand. While this shift signifies the increasing institutionalization of Bitcoin, it has also created resistance at crucial price levels.
Another factor influencing Bitcoin's price is the changing investment landscape. According to Thorn, the rise of artificial intelligence (AI), the expansion of hyperscalers, and gold's resurgence as a safe-haven asset have diverted capital that might have otherwise flowed into Bitcoin. In a market with ample liquidity, "attention is finite," and Bitcoin has had to compete with other compelling investment narratives. The AI sector, in particular, has attracted substantial inflows as investors pursue opportunities in data centers and related infrastructure.
Furthermore, the deleveraging event on October 10, 2025, which wiped out 35% of crypto futures open interest, has dampened market confidence and liquidity. This event, which erased roughly $78 billion in open interest across crypto futures, has made the futures markets more fragile, with open interest still below pre-crash levels.
Galaxy Digital posits that Bitcoin has entered a "maturity era" characterized by institutional absorption, passive flows, and lower volatility. Retail interest has not fully recovered to the levels seen after 2021, and the rise of meme coins has fostered a short-term investment mindset that is not conducive to understanding Bitcoin's long-term value proposition. As a result, Galaxy anticipates that ETF and institutional flows will play a more dominant role in shaping Bitcoin's price action.
Despite the reduced year-end target, Thorn remains optimistic about Bitcoin's potential. He suggests that nearing previous all-time highs before the end of the year is still a reasonable target for short-term bulls. However, analysts emphasize that the market remains fragile, with ETF outflows, decreased liquidity, and continued distribution from long-term holders weighing on sentiment. The coming weeks will be crucial in determining whether Bitcoin can regain its momentum and reassert its position as a leading investment asset.
