Bitcoin Price Prediction In 2025: Soaring On A Tailwind

Bitcoin’s journey started in 2009, with the release of the bitcoin white paper by creator Satoshi Nakamoto. In its early days, BTC was valued at less than a cent.

The early years of bitcoin were marked by steady growth and periods of rapid price appreciation, known as ‘bull runs.’ One of the greatest bull runs saw the price of BTC run from USD$4,000 (CAD$5,626) to USD$69,000 (CAD$97,048) in November 2021.

However, there were also periods of uncertainty, as Sciberras points out.

“During 2014 and 2017 we saw many bitcoin ‘forks’ proposed that split the bitcoin community,” he says. Hard forks are changes to the underlying protocol of the blockchain network that essentially splits a cryptocurrency into two. These forks represented crucial junctures in bitcoin’s history, with various factions in the community attempting to change BTC’s direction. Despite heated debates and a number of forks, bitcoin has persisted in its current format.

“Bitcoin surviving these attempts to change it is a core contributor to where BTC is now, increasing its confidence and resilience,” Sciberras says.

“It has weathered many storms and attempts to change it, with bitcoin forks now a distant memory, combining for less than 1% of bitcoin’s total market cap.”

“Considering how far bitcoin has evolved, the attempts to fork it have slowed considerably over the years,” Lee says. “While innovation is welcome in the industry, that old forks are not as successful has forced developers to reconsider other options to ride on the Bitcoin hype or relevance.”

In June of 2023, BlackRock, the world’s largest asset manager, filed plans to start an exchange-traded fund (ETF) specifically for BTC in the US. Multiple other institutions followed suit, with WisdomTree, ARK Invest and others lodging their first application or updating existing applications shortly after BlackRock’s announcement. In January, 2024, 11 ETF applications were approved for trade in the US and since their inception, these ETFs have seen some of the largest inflows of any ETF in history, marking them as one of the most successful ETF launches ever.

Another defining feature of bitcoin’s price history is the halving event, which happens roughly every four years and reduces the rate at which new coins are created. The most recent bitcoin halving occurred on April 20, 2024, as the bitcoin blockchain ticked over the 840,000 block. The issuance rate for bitcoin is now down to 3.125 BTC per block, taking bitcoin’s annual inflation well below 1%.

“We’ve seen bitcoin’s price significantly increase a year before the halving and a year after,” Sciberras says.

Many investors view the halving event as one of the most significant factors that affects bitcoin’s price. However, Sciberras is circumspect.

“The jury is still out on how priced-in the halving is, or how important the event is in the grand scheme of bitcoin’s price trajectory,” he says. “There is a theory that the four-year halving event is not as significant as many think and that, instead, its alignment with external liquidity cycles is what makes it appear like a trigger for upward price movement.”

However, despite the market slump that the broader crypto market experienced in the six months after the most recent halving, the 2024 US presidential election spurred markets back to life, and BTC has since reached a new all-time high price of USD$99,000 (CAD$139,257).

While Trump’s pro-crypto stance has undeniably positively influenced markets, the bigger news for crypto is the record number of pro-crypto politicians now in both the House of Representatives and the Senate. According to standwithcrypto.org, pro-crypto politicians now outnumber anti-crypto politicians by more than two-to-one.

While the election may have been the catalyzed life into the markets, Lee sees the halving as having an impact on the supply and demand dynamics at play with BTC.

“With the price of Bitcoin nearing the USD$100,000 (CAD$140,662) mark, it becomes hard to discount the impact of the April halving in achieving this feat,” Lee Says. “With reduced issuance and a massive demand from spot Bitcoin ETF and institutional investors, a rare scarcity has been created in the market. Economically, this scarcity and sustained demand accounts for why the coin has continually tested new ATHs over the past month.”

Bitcoin’s performance for the remainder of 2024 and into 2025 depends on a variety of potential bullish and bearish catalysts. Numerous factors, such as the new US government coming into office, institutional adoption, a softening regulatory environment and macroeconomic trends will all influence the price of bitcoin.

Over the past four years, the crypto industry was rocked by a series of enforcements that shook confidence in the sector. The US Commodity Futures Trading Commission (CFTC) and US Securities and Exchange Commission (SEC) have butted heads with numerous crypto companies, including Binance, Coinbase, Kraken, Consensys and Ripple.

Under the direction of the most recent SEC chairman, Gary Gensler, the SEC launched legal action against US-based crypto companies over the past four years. It should be noted that Canada has an even more stringent regulatory framework than the US, which has led to an exodus of many leading crypto companies from the market, including Binance, Bitfinex, KuCoin, Gate.io, OKX, and Gemini.

During his campaign, Trump vowed to get rid of Gary Gensler to appeal to crypto voters, and it appears his threats have been heard. Gensler confirmed in November he would step down from his position in January 2025. The crypto markets rallied on the news.

Further adding to the bullish catalysts, the US Federal Reserve recently cut interest rates in the US by 50 basis points, or half a percent, signalling that the central bank may have reached the peak of its rate hike cycle, which Lee thinks could be a catalyst for a bitcoin rally.

“In September, the US Federal Reserve announced a 50-basis point interest rate cut, lowering the federal funds rate from 4.75% to 5%. The Fed also implemented a 25 basis point cut in October, signalling a formal shift in monetary policy. The Fed’s clear signal of injecting liquidity into the market led to a short-term rise in both the US stock market and the crypto market,” Lee said.

“After adjustments in Q2 and Q3, the Federal Reserve has hinted at plans to slow down rate hikes. The previous adjustments formed a basis through which many accumulated bitcoin, the impact of which is currently being felt across the board. The cyclical positive impact of this capital injection might produce a higher price surge for bitcoin for the rest of Q4.”

When interest rates stabilize or fall, cryptocurrencies such as bitcoin can offer an attractive place for investors to park capital due to its hedge against the debasement of traditional fiat currencies due to its built-in scarcity mechanism—especially now the halving has occurred for the fourth time.

The pro-crypto US government is extremely bullish for bitcoin and the crypto industry, and Trump has endorsed the proposal of a strategic US BTC reserve. Given that the SEC and CFTC will likely reduce their targeted attacks on crypto companies under the new government’s direction, the industry will shed at least some of the negative stigma that had accrued over the past four years.

In Canada, there’s a strongly regulated cryptocurrency market featuring both homegrown exchanges and large international players like Kraken and Crypto.com, which have either been approved or are pending approval from the Ontario Securities Commission (OSC) and the Canadian Securities Administration (CSA). However, cryptocurrency is taxed as a commodity in Canada, so any growth in its value is subject to capital gains tax. In addition, some of the “Big Five” banks will not allow you to purchase crypto with their credit or debit cards, like RBC and BMO.

When it comes to predicting the future of bitcoin, there are two potential outcomes to consider: The bull and the bear case.

Now that the US government has seemingly embraced crypto, one of the main regulatory jurisdictions of the world no longer poses an outsized threat to the crypto industry, which presents a bullish case in and of itself over the next four years.

Couple this with the record number of pro-crypto politicians, the US federal reserve signalling the start of an easing cycle, the anti-crypto SEC chair stepping down, companies buying billions of dollars in BTC, and mentions of a potential US strategic bitcoin reserve, it’s hard not to feel optimistic about bitcoin’s future.

Sciberras says a bullish future for bitcoin may also depend on the sturdiness, or lack thereof, of traditional banking frameworks.

“There are serious issues in the global economy, with the US facing a banking crisis and growing debt obligations,” Sciberras says.

“There were multiple bank failures in 2023, but many forget the underlying problem of these failures still exists.”

If bank failures continue, the government may be forced to step in to provide stimulus or print more money. This would further devalue the US dollar, similar to what occurred during the Covid-19 pandemic.

“In this scenario, bitcoin’s role as a known, fair and resilient asset with a fixed supply where the rules of the game are not easily changed could become attractive,” Sciberras says.

Sciberras also points to the increased demand for block space on bitcoin’s network due to recent innovations, such as ordinals, BRC-20 tokens and Runes, as positive developments. The higher demand, utility, and fees for miners could help alleviate concerns over bitcoin’s long-term security budget. The growing adoption of the Lightning Network, a layer on bitcoin that enables faster transactions, could result in bitcoin becoming more of a payment method rather than just a store of value.

“If bitcoin can continue making progress and adoption in the payment front, it could increase its overall utility and become more ‘money like’—helping it reach those lofty price targets,” Sciberras adds.

“We are seeing early signs of Lightning adoption. Lightning Network’s total payments grew 1,212% over the past two years. We are also seeing Lightning overcoming distribution hurdles with increased support.”

Echoing Sciberras’ sentiment, Lee adds that “the Lightning Network holds great potential in areas like the widespread adoption of crypto payments, the expansion of bitcoin applications, and technical innovation.” However, he recognizes that “it still requires further maturation of technology and market conditions.”

Further, Sciberras cites the approval of spot bitcoin ETFs as a key factor influencing bitcoin’s price in the final month of 2024 and into 2025. It has not only necessitated physical bitcoin purchases—which has lifted prices—but they have also added a considerable air of legitimacy to cryptocurrency more broadly.

“The (approval) could funnel between USD$30 billion (CAD$42 billion) to USD$300 billion (CAD$421 billion) into bitcoin,” he says. As of November 2024, the new US-based ETFs have already seen over  USD$50 billion (CAD$70 billion) in investor funds funnelled into the world’s largest crypto asset.

Finally, Sciberras cites the US Financial Accounting Standards Board’s (FASB) new digital asset reporting rules, set to take effect in December 2024, which will ease rules around the reporting and holding of cryptocurrencies for companies. These new standards remove a significant obstacle for companies holding bitcoin on their balance sheet.

However, every investment has potential downsides, and bitcoin is no exception. Sciberras says that on the negative side of the ledger, there are concerns over bitcoin’s long-term security, given that the block reward will continue to decrease.

Complementing Sciberras’ position, Lee also believes that BTC holder behaviour also affects the viability of fees to subsidize the block reward, despite innovations like the Lightning Network.

“Since bitcoin’s introduction, the market and investors have viewed it more as an inflation-resistant digital gold, with its investment appeal outweighing its utility as a payment method,” he said. “In this context, while the Lightning Network aims to improve bitcoin’s payment efficiency, the market demand for bitcoin has focused more on long-term holding rather than daily transactions.”

Additionally, short-term sell pressure could also negatively impact bitcoin’s price.

Then there is the contentious debate about ‘inscriptions’ on the bitcoin blockchain, which are stores of data such as videos, audio, and text files. While Sciberras acknowledges their potential in generating sustainable fees for the protocol in the long term, especially as more bitcoins circulate and miner reliance on fees increases, he also notes the divided opinions within the community regarding their impact on the network’s functionality.

Notably, a respected original bitcoin developer, Luke Dashjr, regards inscriptions as spam. He argues that they congest the network, complicating the mining process and the network’s overall support. This difference in perspective sets the stage for a potential ideological clash within the bitcoin community.

Environmental and political fall-outs are another concern—despite the fact it derives its power from renewable sources.

“There are continued attacks on bitcoin’s environmental impacts, with the White House proposing a tax of up to 30% on bitcoin miners in the US,” Sciberras says.

If bitcoin mining operations continue to face pressure from governments globally, it could threaten bitcoin’s price.

“The worst-case scenario is we see Europe try to reintroduce a ban on (proof of work), which was tried in 2022 but was swiftly struck down.”

A swing in sentiment against bitcoin and cryptocurrency by governments could also decrease prices.

“The US is becoming incredibly hostile towards cryptocurrency and bitcoin,” Sciberras says.

Additionally, if bitcoin threatens countries’ monopoly on money due to widespread adoption, governments could move to restrict it—which has already occurred in countries like China.

“With the election victory of Donald Trump, most of the crucial headwinds like a ban on bitcoin mining, tax on capital gains and unfavourable regulations are gradually turning into a tailwind,” Lee says.

“If the incoming administration makes good on its promise to halt the regulatory war on the industry, the bear case scenario scare is significantly lessened. However, one potential reality that bitcoin proponents are not seeing is if institutional buyers cash in on their accrued gains and choose to cash out. This might topple the price of BTC, reintroduce volatility and push the coin back down to the USD$50,000 (CAD$70,111) to USD$60,000 (CAD$84,154) range.”

Investing in bitcoin comes with its share of rewards and risks, and understanding these is key to making an informed decision.

Overall, Sciberras is optimistic about bitcoin’s future.

“Looking into 2024 and beyond, I’m personally very long-term bullish on bitcoin,” he says, citing the improved economic backdrop, the halving event, the improved development of scalability within the Lightning network, and the BTC ETFs.

However, bitcoin’s future isn’t without potential hurdles.

One of the significant long-term concerns for bitcoin is its security in the face of a decreasing block reward.

“If there is lacklustre adoption and demand for bitcoin, or fee revenue is inadequate to incentivize miners to upgrade their hardware and mine new bitcoins, security could decrease and threaten the network,” Sciberras says.

Lee adds: “Despite the appeal of bitcoin, it is not a perfect asset and might become overpriced at some point. However, the coin tops the list of assets with the best risk-reward ratio and is worth allocating to a dynamic portfolio. Innovators are working to address some of its shortcomings, and if regulations evolve for the better, the utility of BTC will only grow diverse over time, keeping the asset more relevant overall.”

While bitcoin holds considerable potential, it also comes with significant risks. Investors should carefully consider their risk tolerance and investment goals before diving into the world of bitcoin. As with all investments, it’s wise to do your own research and, if possible, consult with a financial advisor.

Even though cryptocurrency is regulated in Canada, as with any investment, consider your investment goals and current financial situation before investing in cryptocurrency or individual companies with a heavy stake in it. You should also be mindful of the tax implications of investing in cryptocurrency. Cryptocurrency can be extremely volatile—a single tweet can make its price plummet—and it’s still a very speculative investment. This means you should invest carefully and with caution.