On Monday, the price of bitcoin plummeted below $95,000, all but assuring that the world’s top cryptocurrency will not surpass its $108,000 peak as the year comes to a close.
Following the re-election of Donald Trump in November, MicroStrategy’s executive chairman Michael Saylor forecast that bitcoin would hit $100,000 before the end of the year. That largely materialized, with the value of bitcoin exceeding $108,000 earlier in December.
Currently, the price of bitcoin is languishing around $94,000 at the time of writing.
Despite the recent pullback, market analysts remain bullish on the cryptocurrency going into the new year, with analysts at Bitfinex predicting that bitcoin might reach up to $200,000 in the short-term. “Our minimum price target for bitcoin remains at $140,000 - $200,000 around mid-2025,” analysts at Bitfinex said.
“The current bull market reflects strong institutional demand, led by [exchange-traded funds that debuted in January] and spot accumulation. Historical data suggests we are mid-cycle, following the April 2024 halving, with the market likely to peak around [the third and fourth quarter of] 2025, approximately 450 days post-halving,” Bitfinex analysts explained. “Historically, post-halving years have seen the strongest rallies.”
With 2025 being a post-halving year, the next year is a strong test of whether this history will play out. “Bitcoin is entering a phase of "escape velocity" within its fourth halving cycle, driven by unprecedented adoption across corporate, institutional, and even sovereign levels," said Anthony Rousseau, Head of Brokerage Solutions at TradeStation. "A real-time supply shock is unfolding as bitcoin’s fixed supply meets surging demand, pushing prices higher."
According to Rousseau, there are several factors for bitcoin's recent upward price trajectory, but the most salient in 2024 were the debut of America's first exchange-traded funds, as well as new accounting standards. “Bitcoin’s rise has been driven by key developments that are unlocking significant capital from corporations and larger institutional pools," he said. "The Financial Accounting Standards Board’s (FASB) rule change allowing fair value accounting for bitcoin has removed a major barrier, enabling companies to hold bitcoin on their balance sheets with greater transparency and less risk. The approval of bitcoin ETFs by major asset managers like BlackRock and Fidelity has further opened the floodgates, providing institutional investors with a secure and accessible way to gain exposure. While regulated banks are not yet broadly offering custody solutions, the Bank of New York’s exception approval is a key indicator the entry into the space signals that this service is on the horizon, particularly as regulatory clarity improves under a new administration. With two out of three major drivers — accounting standards and ETFs — already in place, the addition of widespread custody solutions by regulated institutions could drive the next wave of adoption and capital inflows into bitcoin in 2025.”