The demand-supply imbalance, intensified by the recent bitcoin halving that decelerated the creation of new bitcoins, catapulted prices further upward.
Crossing the $100,000 milestone for the first time, bitcoin received a boost from the election of Donald Trump alongside several lawmakers supportive of cryptocurrency in recent weeks.
What will captivate the attention of market participants in the forthcoming year is highlighted here.
The absence of regulatory clarity and the role of the U.S. Securities and Exchange Commission (SEC) has been a significant worry for the crypto market. Donald Trump’s policies hold the potential to address this.
Prospects and Regulatory Environment
Securing the passage of legislation is expected to be the initial focus, as mentioned by Nic Carter, a partner at Castle Island Ventures. This will pave the way for prioritizing the crypto market structure bill, aiming to delineate which crypto assets should be considered commodities and which ones securities.
Bitwise analysts foresee bitcoin potentially reaching $200,000 by the conclusion of 2025, while VanEck sets the mark at $180,000.
These forecasts consider the finite bitcoin supply, with 19.79 million coins already circulating, against a backdrop of rising demand.
Institutional investors, such as ETF promoters, corporations, and even nation-states, are significantly driving bitcoin demand. A staggering $36 billion has been invested in spot bitcoin ETFs. If historical trends persist, a market correction might be anticipated in 2025; however, the presence of sizable institutional investors might stabilize any potential declines.
According to data from various sources, the number of businesses accepting bitcoin payments has increased by over 700% since 2014. This rise highlights the growing adoption of cryptocurrency in mainstream financial activities. Additionally, the global crypto ownership rate has reached an average of 3.9%, indicating a broadening acceptance worldwide.
The Supercycle and Economic Challenges
Bitcoin is regarded as being in a “supercycle,” a term coined by Alex Kruger, economist and founder of Asgard Markets. This cycle suggests more frequent corrections ranging from 20% to 40%, as opposed to severe 85% downturns.
Additionally, the Federal Reserve’s actions could potentially disrupt the momentum of bitcoin, setting the stage for unforeseen challenges in the crypto cycle.
Shift Towards Altcoins
Seth Ginns, Managing Partner and Head of Liquid Investments at CoinFund, noted the historical cyclic nature of bitcoin’s dominance. A transition is expected towards altcoins once bitcoin surpasses its historical peak, similar to patterns witnessed in previous cycles.
Despite facing numerous uncertainties, optimism prevails among market participants regarding the cryptocurrency market’s trajectory in 2025 under a new administration in Washington D.C. after an extraordinary year.