As we look further toward 2025, crypto hedge fund founder CK Zheng has some predictions for what’s to come in the industry.
For context, CK is the founder of ZX Squared and the former global head of risk for Credit Suisse. He has experience in digital assets and traditional finance and has shared key insights with CI.
He’s forecasting that Bitcoin (BTC), the flagship cryptocurrency, might reach a record $125k by year-end. However, it might experience significant volatility, with potential 30% corrections, particularly in the first half of the year.
He’s also expecting that Ethereum and Solana will likely outperform as the new administration’s crypto-friendly policies bolster the ecosystem.
Additionally, we’ll likely see more corporations and institutions likely to follow Strategy’s lead by allocating treasury reserves to Bitcoin, driving higher demand.
Our chat with CK is shared below.
Crowdfund Insider: Tell us about ZX Squared Capital. What’s your investment philosophy?
CK Zheng: ZX Squared is a hedge fund whose sole focus is on large-cap digital assets such as Bitcoin, Ethereum, and Solana, using derivatives to manage market fluctuations. We provide exposure to crypto investing in a way that is uniquely focused on achieving high return with reduced risk. Investors come to us for our decades of Wall Street expertise and ability to reduce volatility, manage downside risk, and deliver long-term, sustainable performance.
Crowdfund Insider: How do you see Bitcoin’s price trending this year, and what kind of market fluctuations should we expect to see?
CK Zheng: Bitcoin could potentially reach a record $125k by the end of the year, since it continues to gain traction with new investors and institutions. Its status as “digital gold” keeps growing rapidly, without much competition.
Bitcoin has a first-mover advantage in the ecosystem, as well as an enthusiastic user base around the world, which makes it feel safer… but even with this upward trend expected for Bitcoin, we should brace for more volatility.
We could see up to 30% corrections, especially in the first half of this year. Optimism surrounding the new presidential administration’s policies might have already been priced into the market post-election day back in November, which could lead to a period of adjustment and consolidation as expectations settle.
However, these short-term corrections also serve as an opportunity for more skilled investors to capitalize on its dips in price. It’s important to look at these fluctuations as part of a larger market cycle, and not necessarily a long-term bearish trend.
Crowdfund Insider: Speaking of the new presidential administration in the U.S., do you agree that it has increased the likelihood of introducing new crypto-friendly policies and regulations?
CK Zheng: Yes, I think it’s likely that the new AI & Crypto Czar David Sachs will bring a more crypto-friendly environment. We’re already seeing early signs that the administration is more open to the industry, and I expect that trend will continue, especially due to the economic boost that crypto innovation can bring. We should see more clarity surrounding regulations, making it easier to get involved in the space.
Due to this, I also think that altcoins will likely outperform. Specifically, we may see a greater flow of capital into Ethereum and Solana, which could also cause Bitcoin’s recent dominance to decline over the next 6 to 12 months.
Altcoins have real-world solutions such as enhanced interoperability and better scaling – and as regulations evolve, the ones that address tangible use cases will be the most attractive. When evaluating altcoins, it’s important to look for the same principles as you would with any investment: clear roadmaps, reputable development teams, and business impacts.
Crowdfund Insider: What makes Bitcoin (and other leading cryptocurrencies) so attractive for you?
CK Zheng: Bitcoin’s appeal lies in its potential as a store of value, since it’s actually quite similar to traditional assets like gold. Gold is universally accepted as a store of value today, but, thousands of years ago, no one would’ve predicted it would be that way. Today, Bitcoin is emerging with a capped supply of 21 million coins, creating a similar type of scarcity that adds to its value.
Just as you cannot fully predict how the next decade of the stock market will play out, it’s tricky to predict Bitcoin’s future with certainty, but by being open-minded, we’re positioning ourselves for an opportunity that could be incredibly worthy and game-changing.
Crowdfund Insider: As a crypto hedge fund, what key factors are driving your decisions when building your investment portfolio?
CK Zheng: ZX Squared’s fund strategy is based on our research analysis of the industry’s ecosystem, looking at the short-term and long-term market assessment of each large-cap cryptocurrency. We utilize our crypto option strategy to reduce the down-side risks during a bear market and maintain strong performances during a bull market.
Interestingly, since Bitcoin is still in the early adoption period, its price has behaved similarly to a hybrid of a high-tech stock and gold. It has both correlated with tech stocks during a risk-off period, and correlated with gold as a hedge against inflation and government money printings, which is something to consider when investing.
Overall, cryptocurrencies historically have a four-year business cycle, related to the bitcoin halving process, but the successful launch of crypto ETFs last year may have fundamentally altered this pattern as the traditional institutional investors are actively allocating in this emerging asset class.
Crowdfund Insider: What role do you think institutional adoption will play in shaping this year for Bitcoin, and what does that mean for the broader market?
CK Zheng: Most recently, GameStop is exploring investments in Bitcoin and other cryptos. We’re likely to see more and more corporations and institutions follow MicroStrategy’s lead by allocating treasury reserves to Bitcoin, which should drive demand even higher. This helps legitimize Bitcoin as a store of value and integrates it into traditional finance. As an increasing number of companies adopt this strategy, it encourages others to follow suit and speeds up the shift from individual retail holders to institutional investors.
Ultimately, it could be the catalyst needed for Bitcoin to cement its place in the mainstream.
Crowdfund Insider: What would you say to potential LPs who are interested in gaining some crypto exposure?
CK Zheng: For LPs who have not allocated to the digital asset space, it’s a great investment opportunity missed. If you allocate 60% to equity and 40% to fixed income in the last 10 years, you’d get a cumulative return of about 80%.
However, if you had taken just 5% of that investment 10 years ago and put it into Bitcoin, your portfolio would have yielded cumulative returns of 160%. If you knew that 10 years ago, it’s a no-brainer based on the risk/reward.
Here’s the good news: as mentioned earlier, Bitcoin is still in the early adoption stage, so this risk/reward profile may still apply for the next decade.
For LPs who are concerned about volatility, but interested in having exposures, there are options for you. For example, since inception, we’ve outperformed Bitcoin by 70% in the absolute term, but with only a half of Bitcoin’s volatility. Approaches like this allow investors to participate in the excitement of crypto while maintaining a more balanced risk profile throughout the years.