Bitfinex's Outlook for 2025
- Bitcoin's Bullish Outlook
- Unprecedented Milestones: Bitcoin has surpassed a $2 trillion market capitalization and $100,000, overtaking silver and Saudi Aramco in market capitalization.
- Mid-Cycle: The report places the market "mid-cycle" following the April 2024 halving and expects a cycle peak around Q3-Q4 2025, approximately 450 days post-halving.
- Institutional Inflows: ETFs are identified as a major force, holding over 1.13 million BTC and experiencing $35.5 billion in cumulative US spot ETF inflows. These inflows are seen as providing consistent buying pressure that will limit the size of future corrections.
- Price Targets: Minimum price targets of $145,000 are projected by mid-2025, with potential to reach $200,000 under favorable conditions. The report states that "...our minimum price target for Bitcoin remains at $140,000." Other models and trends suggest targets between $145,000-$200,000, even potentially higher to $290,000 if 2017 cycles are repeated.
- Volatility Expected: The document acknowledges that volatility is expected in Q1 2025, but sees broader trends pointing to further appreciation.
- Bitcoin's Halving Cycle & Market Indicators
- Halving Effects: Post-halving years historically see the strongest rallies. A key idea in the document is that “Historically, post-halving years have seen the strongest rallies.”
- Cycle Indicators: Metrics like MVRV, NUPL, and a Bull-Bear Market Cycle Indicator are used to analyze Bitcoin's position in the cycle, showing that the market remains in a bull phase but is not yet at euphoric peaks.
- Pi Cycle Top: This indicator, based on moving averages, projects potential cycle tops between $145,000 and $189,000, but notes the relevance may diminish over time with the integration of Bitcoin into global finance.
- 4-Year Moving Average: Metrics based on the 4 year halving cycle also suggest cycle tops are likely at $145,000 and $189,000.
- Historical Data: Historical performance suggests a general tendency of diminishing returns in Bitcoin markets.
- Corrections: Previous cycles show that post-halving corrections before reaching new ATHs were contained. Corrections in 2017 were 33.2% and 27.1% in 2020. However, corrections in 2024 have been smaller with less volatility.
- Current Cycle: The current bull cycle is seen as somewhat unique, with Bitcoin reaching an all-time high before the 2024 halving due to the surge in demand from investors using ETFs.
- US Macroeconomic Context
- Labor Market Normalization: The US labor market is gradually normalizing with a slight increase in unemployment to 4.2%, driven by an increased supply of workers rather than job losses, with wage growth remaining robust at 4% annually.
- Housing Market Stability: A projected 2.4% increase in home prices is expected, indicating stable demand, despite elevated mortgage rates. The report states that “a projected 2.4 percent increase in home prices signals stable demand despite elevated mortgage rates”.
- Cautious Fed: The Federal Reserve is expected to proceed cautiously with rate cuts, balancing the cooling job market and persistent inflationary pressures, and will remain restrictive.
- Stock Market Outlook (Trump): Pro-growth policies under a new Trump presidency (tax cuts, deregulation) are seen as beneficial to industrials, financials, and consumer discretionary sectors.
- Debt Ceiling & Liquidity: The reinstatement of the debt ceiling in January 2025 may introduce liquidity via TGA drawdowns, acting as a "quantitative easing" supporting equities.
- Inflation: Inflation remains a critical focus, as the report states, “Inflation remains a critical focus for US policymakers in 2025, as progress toward the Federal Reserve's two percent target remains slow and uneven.” The Fed is likely to proceed cautiously despite the rate cut this week.
- Grayscale Expansion: Grayscale Investments has launched new trusts focusing on Lido DAO (LDO) and Optimism (OP) tokens.
