Bitcoin
Prediction: Bitcoin will soar in 2025
Even with recent volatility, Bitcoin’s immediate and long-term future looks attractive.
It may not seem like it, but Bitcoin (Bitcoin 1.29%) is on track to reach a new all-time high by 2025. Even with the recent dip and its inability to gather any substantial momentum, the cryptocurrency is following a similar pattern as in previous years when it reached new highs.
As for what path it will take between now and then, only time will tell, but with a little number crunching, it will become clear that 2025 is shaping up to be a big year for the world’s original cryptocurrency.
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The patterns are becoming clear
Bitcoin has demonstrated clear and notable price patterns throughout its history, occurring over the course of four years. Typically what we see is a bear market like the one in 2022, a notable recovery the following year, continued progress in the third year when the reduce by half occurs and then a cyclical peak occurs in the year following the halving.
We are currently in the third year of the halving. And Bitcoin seems to be following the traditional four-year pattern this time around, just as it has in the past few cycles. This means we can use some of its historical performance to get an idea of what 2025 will hold.
Looking to 2025
Past performance, of course, is no guarantee of future results. But a little speculation can be healthy and help us assess the long-term global potential. That said, let’s go back to the four-year model.
In years when a halving occurs, Bitcoin increases by around 125% on average. If this is true this year, then it means we can expect to see Bitcoin reach almost $100,000 by the end of 2024. This price was derived by calculating a 125% increase in the price of Bitcoin at the beginning of the year, which was of US$44,000.
So let’s fast forward to late 2024 and early 2025. On average, in the year after the halving, Bitcoin returns a whopping 400%. The most obvious reason for such a monumental performance during these years is that the market starts to adjust to the halving, which means that these years the supply shock finally materializes. If this happens again and Bitcoin ends 2024 in line with the historical average, that would put its price at around $500,000 in 2025.
Final considerations to keep in mind
Before we wrap up, it’s worth noting that, as fanciful as this number may seem, Bitcoin often exceeds expectations in bull markets. It’s made a name for itself doing just that. So while $500,000 may seem absurd, stranger things have happened. For example, the cryptocurrency jumped 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. The price is driven by its supply and demand dynamics, which are changing favorably over the years.
For example, its supply is limited to 21 million coins (19.7 million are now in circulation), and this scarcity is one of its defining characteristics. And demand is increasing. Institutional interest has increased in recent years, and the introduction of spot bitcoin exchange traded funds will further democratize access. Retail interest also remains strong, with an increasing number of individuals looking to it as a store of value.
Then there is the decentralized nature of Bitcoin and its growing role in a world where trust in traditional financial systems is wavering. Digital currency offers an alternative that is not subject to government control or monetary policy, a growing luxury fiat currencies continue to inflate.
Investors would do well to focus on these dynamics rather than fixating on precise price objectives. 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 pronounced sell-off.
RJ Fulton has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.