Bitcoin, the world’s first and most prominent cryptocurrency, has captivated investors and sparked global debate. However predicting its future price remains a challenge, given its volatility and evolving market dynamics. So, what could lie ahead for Bitcoin in 2024 and 2025? Let’s explore the key factors and potential scenarios.
Bitcoin price dropped to $16K by the end of 2022. One of the important reasons for this was the destruction caused by Covid-19 in production and supply chain. This caused inflation and stagnation in the world economy. Since last year, the steps taken by the Fed under the leadership of Powell in the fight against inflation seem to have yielded positive results. Powell is getting closer to his goal of reducing inflation to 2 percent. If we take into account that interest rates will also decrease as inflation decreases, it is possible to say that a growth trend will occur, especially in the US economy, for the next 2-3 years.
Although the uniqueness of Bitcoin does not show synchronization with the general economic trend from time to time, in parallel with the contraction and expansion of the US economy, Bitcoin price increased from $16K to $48 between the end of 2022 and now.
What will happen next:
Bitcoin has a unique appeal as the world’s first digital currency. Unlike traditional currencies, its easier accessibility and decentralized structure reinforce its unique position. We can get an idea about its potential by looking at how its value has increased from 0 to 10 thousand dollars in the past years.
Although experts’ Bitcoin price predictions for the next few years on various platforms ranging from $100K to $1M, predicting the future price of Bitcoin is notoriously difficult as it is affected by a complex interplay of factors. Therefore, it is necessary to take into account the positive and negative effects that may determine the future price of bitcoin.
Factors that may increase the price of bitcoin
The SEC’s Approval of Spot Bitcoin ETFs
On January 10, 2024, the U.S. Securities and Exchange Commission (SEC) approved the listing and trading of the first-ever spot bitcoin ETFs.
The approved ETFs are expected to begin trading in the coming weeks or months.
The launch of spot bitcoin ETFs could lead to increased demand for bitcoin, potentially driving up its price.
Spot bitcoin ETFs will make it easier for investors, both institutional and retail, to gain exposure to bitcoin without having to purchase and store the digital asset themselves.
ETFs can increase the liquidity of bitcoin, making it easier to buy and sell the asset.
ETFs could help to reduce the volatility of bitcoin prices by providing a more stable way to invest in the asset.
Traditional methods of investing in Bitcoin, like buying directly on an exchange or through a Bitcoin IRA, can be daunting for some investors. Spot Bitcoin ETFs trade similarly to stocks on traditional exchanges, making them familiar and accessible to a wider range of investors.
Holding Bitcoin directly comes with inherent risks, such as the potential for loss due to price volatility or security breaches. Spot Bitcoin ETFs offer a more diversified and potentially less risky way to invest in Bitcoin, as they are typically backed by a basket of Bitcoin, and held by a custodian
The introduction of Spot Bitcoin ETFs could lead to improved price discovery for Bitcoin, as a larger pool of investors will be able to participate in the market. This could potentially make the Bitcoin market more efficient and less volatile.
Low Interest Rates:
The Fed had been increasing interest rates for a long time to stop inflation and ensure price stability in the dollar. This reduced the demand for borrowing. Now, the Fed may start to reduce interest rates towards the middle or end of 2024, taking into account economic indicators. Since the cost of borrowing will decrease, the increase in supply and demand will cause economic growth.
Lower interest rates generally make riskier assets like Bitcoin more attractive. Investors seeking higher returns may shift funds from low-yielding bonds and other traditional assets towards Bitcoin, boosting demand and driving up the price.
A sustained decline in rates could trigger a “fear of missing out” sentiment among investors who haven’t yet entered the Bitcoin market. This influx of new buyers could further amplify the price surge.
Global Economic Recovery:
A strong global economic recovery could further amplify the positive impact of lower rates on Bitcoin. Conversely, an economic slowdown could dampen the bullish effect.
As economies recover and unemployment falls, people tend to have more disposable income and become more comfortable with taking risks. This could lead to greater interest in Bitcoin as an investment, driving up demand and its price.
A strong economy could foster greater acceptance and adoption of Bitcoin for everyday transactions. Increased use cases and wider accessibility could contribute to long-term price appreciation.
Improved economic conditions could entice more institutional investors into the cryptocurrency market, including Bitcoin. Their large capital injections could significantly impact the price by increasing demand and liquidity.
It is true that China, the world’s second-largest economy, has some concerns. The International Monetary Fund (IMF) and other major institutions predict China’s GDP growth will fall from 5.2% in 2023 to around 4.5% in 2024. Although slower than the dizzying pace of recent years, it will still be significantly higher than in most developed countries. In addition, relative improvements in the US and EU economies may limit the economic contraction in China.
Considering all these conditions, it is possible that the bitcoin price may rise in parallel with the economic recovery, but more aggressively. And yes, at this point, it may be possible for Bitcoin to exceed $100,000 in price towards the end of 2025.
But it should not be forgotten that worse scenarios are always possible. Investing in low-risk, beneficial, and sustainable economic areas may be the best option for everyone. However, if you are going to invest in cryptocurrencies, it is very important to do your own research, understand the risks involved, and only invest what you can afford to lose.
