Take a moment and think about just how far Bitcoin (BTC -1.45%) has come. What was once worth just a few pennies has blossomed over the last decade and a half and is now worth more than $60,000. By most accounts, it's probably a safe bet that Bitcoin will keep rising over the next 15 years. But what about the more immediate future?
Here's a little speculation on where Bitcoin might be headed in 2025.
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Bitcoin's cyclical nature
As unpredictable as Bitcoin's price might seem, since its beginning in 2009, it has followed an eerily similar pattern over the course of roughly four-year periods. Referred to as a cycle, Bitcoin has experienced three cycles so far and is currently in its fourth.
It's likely no coincidence that the duration is four years, as this is how often Bitcoin's halving occurs. After every 210,000 blocks added to its blockchain (which happens roughly every four years), Bitcoin's inflation rate is reduced by half. This change essentially introduces a supply shock and makes it so that even if demand remains constant, its price has to rise to compensate for the reduction to its supply.
Typically, the four-year cycle has gone something like this. It has begun with a bear market phase, such as the one observed in 2022, characterized by a sharp decline from a previous peak. The following year has typically marked the start of a recovery phase, similar to the upward trend we saw in 2023. The third year, which includes the halving and is what we are currently in since Bitcoin underwent a halving in April, has often triggered notable price increases as the anticipation of reduced supply becomes apparent. Finally, in the fourth year, which would be 2025 if the cycle holds true, Bitcoin has tended to experience its most notable gains.
Projecting Bitcoin's price in 2025
While there aren't any guarantees, Bitcoin appears to be following its historical four-year pattern for now. Making the assumption that the pattern will continue, we can make educated guesses about what its price might be in 2025 based on what has occurred in past cycles. Let's start with 2024, the current year, since Bitcoin underwent its most recent halving in April.
As previously explained, the halving is highly influential on Bitcoin's price. In 2012, the year of Bitcoin's first halving, it jumped 119%. Four years later in 2016, it made a commendable 93% gain. And in 2020, it skyrocketed by 174%. That means that in the years a halving occurs, Bitcoin has increased by an average of around 125%. Let's start here before getting into 2025.
If Bitcoin grows by 125%, then when measuring from its price at the beginning of 2024, it would be plausible to expect a $99,000 Bitcoin by year's end. Given that Bitcoin is already up around 60% this year, it would need just another 60% jump to uphold the historical norm. That might sound significant, but remember, this is Bitcoin. History has shown that it can cover that kind of ground in just a couple of months.
Assuming 2024 unfolds this way, we could see a near-$100,000 Bitcoin to kick off 2025. This alone is impressive, and makes investing today a valuable opportunity. However, in past cycles, the halving's full effect has reached its peak in the year following the event.
In 2013, the year after Bitcoin's first halving, it grew by an astounding 840%. After another halving passed in 2016, it followed up in 2017 with a 331% gain. Then in 2020, it rose by a healthy 174%. Add it all up and on average, Bitcoin has seen gains of a staggering 400% during these post-halving years. So, when measured from a projected starting price of $99,000 at the beginning of 2025, a 400% increase would push Bitcoin's price to nearly $500,000 by the end of next year.
Managing expectations
It's worth recognizing that past performance is no guarantee of future results. However, until proven otherwise, the continuation of Bitcoin's four-year cycle is compelling to say the least.
What is of more importance is that history shows that the full effect of the halving doesn't fully materialize until at least a year after. In addition, even if Bitcoin does fall short of the average for post-halving years in 2025 or the cyclical pattern is broken, it could be argued that few other assets offer as much long-term potential as Bitcoin.
With its finite supply of 21 million coins and industry leading levels of decentralization and security, Bitcoin has risen to become the quintessential cryptocurrency, an accomplishment that should help it sustain its journey of price appreciation for years to come.
