Even with recent volatility, Bitcoin's immediate and long-term future looks appealing.
It might not seem like it, but Bitcoin (BTC 3.61%) is right on track to hit a new all-time high in 2025. Even with the recent dip and its inability to mount any substantial momentum, the cryptocurrency is following a pattern resembling that of past years when it went on to hit new highs.
As for the path it takes between now and then, only time will tell, but with a little number crunching, it will be clear that 2025 is shaping up to be a great year for the world's original cryptocurrency.
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Patterns are becoming clear
Bitcoin has demonstrated clear, notable price patterns over 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 in the following year, continued progress in year three when the halving takes place, and then a cyclical peak hits in the year after the halving.
We are currently in year three, the halving year. And Bitcoin appears to be following the traditional four-year pattern this time around, just like in the last cycles. This means that we can use some of its historical performance to get an idea of what 2025 might have in store.
Looking to 2025
Past performance, of course, is no guarantee of future results. But a bit of speculation can be healthy and help us gauge overall long-term potential. With that said, back to the four-year model.
In the years that a halving occurs, Bitcoin increases by about 125% on average. If this holds true this year, then that means we could expect to see Bitcoin hit nearly $100,000 by the end of 2024. This price was derived by calculating a 125% increase from Bitcoin's price at the beginning of the year, which was $44,000.
So let's jump ahead to the end of 2024 and the beginning of 2025. On average, in the year after a halving, Bitcoin returns a blistering 400%. The most obvious reason for such monumental performance during these years is that the market begins to adjust to the halving, meaning that in these years the supply shock finally materializes. If this happens again and Bitcoin finishes 2024 in line with the historical average, that would put its price around $500,000 in 2025.
Final considerations to keep in mind
Before wrapping this up, it's worth highlighting that as fanciful as this number might sound, Bitcoin often exceeds expectations in bull markets. It has made a name for itself by doing this. So even though $500,000 might seem outlandish, stranger things have happened. For instance, the crypto jumped 850% in 2011.
But to be completely honest, whether Bitcoin hits this price or not in 2025 shouldn't really matter for 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 as the years pass.
For example, its supply is capped at 21 million coins (19.7 million now are in circulation), and this scarcity is one of its defining features. And demand is increasing. Institutional interest has surged in recent years, and the introduction of spot Bitcoin exchange-traded fundswill further democratize access. Retail interest also remains strong, with an ever-growing number of individuals looking to it as a store of value.
Then there's Bitcoin's decentralized nature and its growing role in a world where trust in traditional financial systems is wavering. The digital coin offers an alternative that is not subject to government control or monetary policy, an increasing luxury as fiat currencies continue to inflate.
Investors would do well to focus on these dynamics rather than fixate on precise price targets. Bitcoin's potential to redefine finance and serve as a robust store of value remains strong, making it a compelling 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.
