Key Takeaways
- • CK Zheng, founder of crypto hedge fund ZX Squared and former global head of risk at Credit Suisse, forecasts Bitcoin could reach a record $125k by end-2025, while warning of potential corrections of up to 30%, particularly in the first half of the year (per Crowdfund Insider).
- • Zheng expects Ethereum and Solana to outperform as the new U.S. administration's crypto-friendly policies strengthen the ecosystem, potentially reducing Bitcoin's dominance over the next six to 12 months.
- • Zheng cites corporate and institutional treasury allocations to Bitcoin, including GameStop's exploration of Bitcoin investments, as a driver of future demand that could help legitimize Bitcoin as a store of value.
- • ZX Squared runs a derivatives-based strategy focused exclusively on large-cap digital assets, and Zheng claims the fund has outperformed Bitcoin by 70% in absolute terms since inception with roughly half of Bitcoin's volatility.
Summary
CK Zheng, founder of ZX Squared and former global head of risk at Credit Suisse, outlined his 2025 outlook for digital assets in an interview with Crowdfund Insider. ZX Squared is a hedge fund focused solely on large-cap digital assets such as Bitcoin, Ethereum and Solana, using derivatives to manage market fluctuations. Zheng said the firm's strategy relies on research into the ecosystem and short- and long-term assessments of each large-cap cryptocurrency, using crypto option strategies to reduce downside risk in bear markets while aiming to maintain performance in bull markets.
On price, Zheng said Bitcoin could reach a record $125k by year-end, driven by growing traction among new investors and institutions and its positioning as "digital gold." He cautioned that volatility should be expected, with corrections of up to 30% possible, especially in the first half of the year. He attributed part of that risk to optimism around the new administration's policies having already been priced in since the November election, which could lead to a period of adjustment. He framed such pullbacks as opportunities for skilled investors and as part of a larger market cycle rather than a long-term bearish trend.
Zheng expects regulatory clarity to improve under the new administration, pointing to David Sachs, the new AI & Crypto Czar, as a likely driver of a more crypto-friendly environment. He expects altcoins to outperform, with greater capital flows into Ethereum and Solana potentially reducing Bitcoin's dominance over six to 12 months. He also said Bitcoin's behavior has resembled a hybrid of a high-tech stock and gold, and that the launch of crypto ETFs last year may have altered the historical four-year cycle tied to Bitcoin halvings as institutional investors allocate to the asset class.
On institutional adoption, Zheng said corporations and institutions are likely to follow MicroStrategy's lead in allocating treasury reserves to Bitcoin, citing GameStop's recent exploration of Bitcoin and other cryptocurrencies as an example. He argued this would legitimize Bitcoin and integrate it into traditional finance. To prospective LPs without digital asset exposure, Zheng cited a hypothetical in which a 5% Bitcoin allocation over the past decade would have produced 160% cumulative returns versus about 80% for a 60/40 equity-fixed income portfolio. He also said ZX Squared has outperformed Bitcoin by 70% in absolute terms since inception with half of Bitcoin's volatility. These are the founder's own claims and figures, presented without independent verification.
On price, Zheng said Bitcoin could reach a record $125k by year-end, driven by growing traction among new investors and institutions and its positioning as "digital gold." He cautioned that volatility should be expected, with corrections of up to 30% possible, especially in the first half of the year. He attributed part of that risk to optimism around the new administration's policies having already been priced in since the November election, which could lead to a period of adjustment. He framed such pullbacks as opportunities for skilled investors and as part of a larger market cycle rather than a long-term bearish trend.
Zheng expects regulatory clarity to improve under the new administration, pointing to David Sachs, the new AI & Crypto Czar, as a likely driver of a more crypto-friendly environment. He expects altcoins to outperform, with greater capital flows into Ethereum and Solana potentially reducing Bitcoin's dominance over six to 12 months. He also said Bitcoin's behavior has resembled a hybrid of a high-tech stock and gold, and that the launch of crypto ETFs last year may have altered the historical four-year cycle tied to Bitcoin halvings as institutional investors allocate to the asset class.
On institutional adoption, Zheng said corporations and institutions are likely to follow MicroStrategy's lead in allocating treasury reserves to Bitcoin, citing GameStop's recent exploration of Bitcoin and other cryptocurrencies as an example. He argued this would legitimize Bitcoin and integrate it into traditional finance. To prospective LPs without digital asset exposure, Zheng cited a hypothetical in which a 5% Bitcoin allocation over the past decade would have produced 160% cumulative returns versus about 80% for a 60/40 equity-fixed income portfolio. He also said ZX Squared has outperformed Bitcoin by 70% in absolute terms since inception with half of Bitcoin's volatility. These are the founder's own claims and figures, presented without independent verification.
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