Regulatory clarity and institutional adoption could drive bitcoin this year to more than double its current price, according to H.C. Wainwright. The firm raised its price target on the flagship cryptocurrency to $225,000 from $145,000, it said in a note to investors Thursday, implying upside of more than 130%. “Based on our analysis of historical price cycles and recent price action, along with the widely-held expectation for a more favorable regulatory environment for the digital assets industry in the U.S. in 2025 under the new administration, the availability of spot ETF products in the U.S., and accelerating institutional investor and corporate adoption, we now estimate that BTC will reach $225,000 per coin by the end of 2025,” H.C. Wainwright analyst Mike Colonnese said. The new price target implies a total market cap of $4.5 trillion, which would represent about 25% of the total market cap of gold, he added. He also cautioned that 30% drawdowns are common during bitcoin bull market cycles, and that investors should brace for some volatility in the weeks ahead. “BTC price action has historically been highly correlated to global liquidity (as measured by M2), which has been on a downtrend since October,” Colonnese said. “As such, we estimate BTC could retrace back down to the mid-$70,000 range in early 1Q25 before resuming its uptrend.” On the flip side, he said bitcoin’s price could “significantly exceed” the firm’s new target if the U.S. implements bitcoin as a treasury reserve asset this year — an idea first floated by Wyoming Sen. Cynthia Lummis last summer and echoed by President-elect Donald Trump, whose vision more closely resembles a stockpile. The firm has assigned a 60% likelihood that the U.S. will establish a national strategic bitcoin reserve this year. This year is expected to be another banner year for crypto. Investors are hopeful that Congress will provide long-awaited crypto-focused legislation, and any regulatory clarity could drive further investment in bitcoin from advisor allocations as well as public companies adding the crypto asset to their treasuries, according to H.C. Wainwright. — CNBC’s Michael Bloom contributed reporting.