This year has been the perfect storm of news events for the cryptocurrency landscape. The emergence of Spot Bitcoin ETFs, April’s halving event, and the US election win for a President with a positive crypto outlook have already seen BTC rally to new highs in 2024, but where will the bull run end?
Polls on the US West Coast had barely closed when Bitcoin climbed to its first all-time high in almost eight months. As the cryptocurrency broke the $90k barrier, we also saw its total market capitalization surpass $3 trillion for the first time since 2021 in a move that pushed the crypto industry’s total value close to France’s GDP.
Meanwhile, Bitcoin’s market capitalization flipped that of silver in an appropriate milestone for the digital currency that’s often been referred to as ‘digital gold.’
Over the first six weeks of Q4 2024, Bitcoin has rallied 46%. This growth rate perfectly mirrors BTC’s performance during the same period in Q4 2020, at the beginning of a crypto market rally that saw Bitcoin accelerate a further 293% almost exactly one year later in November 2021. Could another 300% rally take place for BTC in the months ahead? The answer is pretty complicated.
Cyclical Bitcoin
In a market as volatile as crypto, there are precious few cyclical trends for investors to build an accurate future outlook. However, Bitcoin’s pre-programmed halving events remain one of the most reliable catalysts for bull markets throughout the history of the ecosystem.
When Bitcoin was created, its proof-of-work (PoW) mechanism was designed to halve the BTC distributed to its miners approximately every four years. Miners mint BTC by solving complex equations with masses of computational power, and these ‘halving events’ were likely created as a protection against inflation.
In practice, these halvings meant that the scarcity of Bitcoin doubled overnight whenever the mechanism was triggered, prompting a sharp rise in the value of BTC for around 12 to 18 months after the event.
Bitcoin halvings have occurred in 2012, 2016, 2020, and 2024, and in each of the prior iterations, BTC has reached new all-time highs of $1,132, $19,783, and $69,000, respectively during the following year.
What does this mean for Bitcoin in 2025? According to its Stock-to-Flow (S2F) model, which accounts for the number of BTC available in the market relative to the amount being produced annually, we could have much more price movement.
Bitcoin Magazine Pro’s S2F model has used Bitcoin’s historical cycles to determine that BTC will reach $421,000 by April 25, 2025. At this point, it’s important to note that there will be a lot of caveats to address that are likely to impact such a seismic figure, but this cyclical indicator is one of the most effective historical trends to consider when gaining an understanding of Bitcoin’s prospects for the year ahead.
Trump’s Impact
The resounding US election victory for Donald Trump on November 5 was welcomed enthusiastically by many cryptocurrency supporters following the President-elect’s positive comments on crypto.
Although Trump had been skeptical of digital currencies in the past, the Republican candidate was eager to emphasize the importance of Bitcoin mining in the United States at the 2024 Bitcoin Conference in Nashville in July and even suggested that he would establish a federal Bitcoin reserve upon winning the election.
However, the biggest cause for optimism for crypto enthusiasts was Trump’s pledge to oust Gary Gensler, chair of the Securities and Exchange Commission, who has filed a number of lawsuits against cryptocurrency projects for allegedly violating securities laws.
While Gensler has defended his stance by suggesting that he’s merely acting to protect consumers from crypto’s high-profile risks and collapses, his critics have argued that the chair has been repeatedly stifling innovative projects.
Although it’s difficult to anticipate exactly how Trump’s relationship with crypto will play out during his second term, the President-elect’s biggest impact on the industry may stem from his control of the economy.
The 2021 cryptocurrency market rally that saw BTC reach nearly $70,000 occurred off the back of a low-rate post-pandemic economic environment where government stimulus packages helped to generate significant consumer spending power. As a result, both the S&P 500 and cryptocurrency ecosystem rallied to new highs.
While both crypto and the S&P 500 reached new highs in the wake of the election, Trump will be reentering the White House as the US battles to control historically high inflation rates with combative interest rate hikes from the Federal Reserve. It’s also worth noting that October was a challenging month for US markets, and recession fears could linger after the ongoing post-election relief rally.
Fears over Trump’s use of tariffs on trade have led to analysts suggesting that inflation could once again rise over the term, which could negatively impact a crypto bull market.
Weaker Returns
The strength of Bitcoin’s rally could also be impacted by the weakening strength of its post-halving cycles in 2025, making the coin’s lofty $421,000 stock-to-flow forecasts seem a little too fanciful.
In January 2024, the SEC approved the launch of Spot Bitcoin ETFs, which helped to push the value of BTC higher ahead of its April halving event. However, this has pushed the circumstances of the halving into uncharted territory. Bitcoin has never been close to its all-time high at the time of a halving event, indicating that the impact of the rally may be much weaker because ETF inflows have interrupted the cycle.
In fact, the price of BTC fell for the first time ever in the four months following its halving event, dipping 8.2% between April 19, and August 19, 2024.
With Bitcoin trailing its 2020 rally even with the boost of a Trump election win factored in, indications suggest that institutional investment and mounting external factors are weakening the impact of Bitcoin’s cycles.
Is Crypto Growth Certain?
Historical trends suggest that Bitcoin is likely to continue growing into 2025, with many analysts anticipating the cryptocurrency reaching values in excess of $100,000. However, this post-halving rally appears more likely to hinge on external factors that affect Bitcoin’s programmed cycles.
With this in mind, investors should look to Trump’s economic impact in early 2025 to see just how high BTC and the wider cryptocurrency landscape can go in the months ahead.
Although $421,000 by April 2025 seems overly ambitious, the prospect of greater crypto acceptance on Wall Street and a healthy economy could unite to drive the payments industry to some impressive highs in the new year.
Read Also: Bitcoin Nears Historic $100,000 Milestone
Disclaimer: Information provided on AlexaBlockchain is for informational purposes only and not financial advice. Crypto investments, including ICOs, IDOs, presales, and other token offerings, are highly risky. You are responsible for conducting your own research (DYOR) before making any financial commitment