Markets
Prediction: Bitcoin will skyrocket in 2025
Even with the recent volatility, Bitcoin’s immediate and long-term future looks attractive.
It may not seem like it, but Bitcoin (Bitcoin -2.13%) is on track to reach a new all-time high in 2025. Even with the recent decline and its failure to build substantial momentum, the cryptocurrency is following a pattern similar to that of past years when it reached new highs.
As for what path it will take from here, only time will tell, but with a little math, it will be clear that 2025 is shaping up to be a big year for the world’s original cryptocurrency.
Image source: Getty Images.
Trends are becoming clear
Bitcoin has shown clear and notable price trends over its four-year history. Typically, what we see is a bear market like the one in 2022, a notable recovery the following year, and a continued rally in the third year when the price of Bitcoin is high again. reduce by half takes place, then a cyclical peak is reached the year following the halving.
We are currently in year three, the year of the halving. And Bitcoin seems to be following the traditional four-year pattern this time around, just like it has in the last few cycles. This means we can use some of its historical performance to get an idea of what 2025 might hold.
Outlook for 2025
Past performance is obviously not a guarantee of future results. But a little speculation can be beneficial and help us assess the overall long-term potential. That said, let’s go back to the four-year model.
In years when a halving occurs, Bitcoin increases by about 125% on average. If this holds true this year, it means we could expect to see Bitcoin reach nearly $100,000 by the end of 2024. This price was arrived at by calculating a 125% increase from Bitcoin’s price at the start of the year, which was $44,000.
Now let’s fast forward to late 2024 and early 2025. On average, the year following a halving, Bitcoin returns an impressive 400%. The most obvious reason for such a monumental performance during these years is that the market is starting to adjust to the halving, meaning the supply shock is finally materializing during these years. If this happens again and Bitcoin ends 2024 in line with the historical average, this would put its price around $500,000 in 2025.
Final Considerations to Keep in Mind
Before we conclude, it’s worth pointing out that, as far-fetched as this number may seem, Bitcoin often exceeds expectations during bull markets. It’s made a name for itself doing so. So while $500,000 may seem outlandish, stranger things have happened. For example, the cryptocurrency surged 850% in 2011.
But to be completely honest, whether or not Bitcoin reaches that price in 2025 shouldn’t really matter to investors. What’s crucial is understanding the long-term dynamics that make it a unique investment. Price is determined by supply and demand dynamics, which evolve favorably over the years.
For example, its supply is limited to 21 million coins (19.7 million are currently in circulation), and this rarity is one of its defining characteristics. And demand is growing. Institutional interest has increased in recent years, and the introduction of Bitcoin spot exchange traded funds will further democratize access. Retail interest also remains strong, with an ever-increasing number of individuals viewing it as a store of value.
There’s also the decentralized nature of Bitcoin and its growing role in a world where trust in traditional financial systems is faltering. The digital currency offers an alternative that isn’t subject to government control or monetary policy, an increasingly common luxury. fiat currencies continue to inflate.
Investors would be better off focusing on these dynamics rather than fixating on specific price targets. Bitcoin’s potential to redefine finance and serve as a robust store of value remains strong, making it an attractive investment, especially as it experiences a steep decline.
RJ Fulton has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.