In 2024, bitcoin grew 150%, making it one of the best performing markets of the year. This can be attributed to three bullish factors (investors use "bullish" to denote a strong uptrend - ed.) - regulatory optimism, an improved macro environment and growing investor enthusiasm.
Looking ahead, the world's largest cryptocurrency is expected to continue its bullish trend in 2025, with analysts predicting it could reach a price range between $200,000 and $250,000, Euronews reported.
Historically, bitcoin has reached new highs every four years during its last two bull cycles since 2017. Each of the cycles saw gains of 2,300% and 1,700%, before plunging between 70% and 80%.
Since its low of $16,000 two years ago, bitcoin has risen approximately 600%, indicating significant potential for further growth over the next two years.
Tom Lee of Fundstart Global Advisors predicts that the largest cryptocurrency could reach $250,000 in 2025. Standard Chartered forecasts that the price will reach $200,000 next year.
Cryptocurrencies typically tend to move in a bullish trend during central banks' monetary easing cycles. Investors' appetite for risky assets typically increases in conditions of increased liquidity and expanding money supply.
As the world's major central banks are expected to continue cutting interest rates through 2025, the prevailing risk sentiment is likely to support further gains in bitcoin.
Regulatory changes were the main driver of bitcoin's price surge in 2024. Its price saw a significant rise, surpassing the critical resistance level of US$52,000 in February.
It followed the US Securities and Exchange Commission's (SEC) approval of a bitcoin spot ETF in January, ahead of the long-awaited halving event in April.
Bitcoin traded between $52,000 and $72,000 until November, when Donald Trump's victory in the US presidential election catalysed further gains.
Trump's promise to implement crypto-friendly policies, including his announcement that he would make America the "crypto capital of the planet," has boosted investor sentiment.
In early December, bitcoin surpassed the psychological $100,000 mark after Trump announced plans to nominate Paul Atkins, a former SEC commissioner who supports cryptocurrencies, as the next chairman of the commission.
"That performance is likely to continue into 2025, we'll have a clearer regulatory environment and we see institutional capital coming to the table in a more significant way than we've ever seen," said Josh Gilbert, market analyst at eToro Australia.
The Trump administration's policies could continue to provide regulatory tailwinds for cryptocurrencies well into 2025. In December, the US president confirmed his plan to accept bitcoin as part of the US strategic reserves. Investment firm Charles Schwab expects the cryptocurrency to reach $1 million if that happens.
At a conference in July, the president-elect said owning bitcoin would create a "permanent national asset for the benefit of all Americans." Senator Cynthia Loomis outlined the purchase of no more than 200,000 bitcoin tokens a year for five years, or roughly 1% of the total supply.
Based on the bitcoin mining mechanism, the maximum supply limit is 21 million tokens. Although the proposal does not clarify how the legal procedure would go, the US government could sell some of its gold reserves to raise funds to purchase bitcoins.
However, the long-term outlook may not change the short-term risk of a correction. The bitcoin price has retreated sharply from an all-time high of more than US$108,000 in mid-December to the current level of US$94,000.
This is likely due to profit-taking and risk-off sentiment. This decline coincides with the pullback in global stock markets over the past two weeks.
Until the incoming Trump administration implements clear pro-crypto policies, some investors may prefer to lock in their gains by 2024 | BGNES
