Bitcoin’s Year Ahead: Why 2025 Could Be a Halving Hit

Published Date: December 04, 2024 | Author: André Dragosch, Director, Head of Research, ETC Group (now a part of Bitwise)

Cryptocurrency Hub

Authors’ views are their own and not those of HANetf

So far, bitcoin and crypto assets are the best performing assets this year. We believe they will repeat as the best performing asset class in the world in 2025.
Specifically, in 2025, we expect a positive confluence of multiple macro and on-chain factors to combine to lift prices higher. The most prominent factors are:

1. Supply shock: The supply shock from the bitcoin halving will intensify in 2025.

2. Demand shock: A significant reduction in US regulatory uncertainty will catalyse institutional purchases and accelerate crypto adoption rates

3. Accommodative macro conditions: Continued monetary stimulus amid anaemic growth will further buoy the space

First, the supply shock from the bitcoin halving that occurred in April 2024 is likely to intensify and become most pronounced in the first half of 2025. Historically, there has been a significant time lag between priors halving event and positive performance effects, as the supply deficit tends to accumulate gradually over time. We are today reaching the “sweet spot” of this impact.

This supply shock will clash with a persistent demand overhang from US spot bitcoin ETF purchases, increased adoption of bitcoin by corporate treasuries, and potential purchases of bitcoin by governments. US spot Bitcoin ETF demand alone has already outstripped production by a factor of 2.5 times since the launch of trading in January 2024, and we expect flows to continue into 2025. When you add in corporate treasury and potential government buying, the supply/demand mismatch appears significant.

We believe the market may be as-yet underestimated the impact of the U.S. election, which significantly reduced the level of both real and perceived regulatory threat to the crypto industry in the world’s largest economy. The new administration’s pro-crypto stance is likely to accelerate the adoption of cryptoassets in the US and globally. Indeed, the US Congress now consists of the most pro-crypto members ever elected, and both President Trump and some influential senators are known to be very crypto-friendly.

The fact that Trump has promised to establish a pro-crypto advisory council in his first 100 days in office supports the view that the regulatory climate in the US will be very supportive in 2025. In this context, we expect more spot ETFs to be approved, including a Solana and XRP ETF, which would benefit significantly over the course of 2025.
We also believe that the time to underweight altcoins such as Ethereum versus bitcoin is coming to an end, as key themes such as stablecoins and the tokenisation of real-world assets are likely to accelerate in 2025. In general, the decline in US regulatory uncertainty should disproportionately benefit altcoins relative to bitcoin. We believe that major smart contract platforms such as Solana or Aptos are likely to outperform bitcoin in 2025.

“The adoption of cryptoassets could be supercharged by the US government’s plans to adopt bitcoin as a strategic reserve asset.”

The adoption of cryptoassets could be supercharged by the US government’s plans to adopt bitcoin as a strategic reserve asset. If the proposed “Bitcoin Bill” is enacted – calling on the U.S. government to buy and hold 1 million bitcoin — this could spark a global race for nation-state adoption of bitcoin and further accelerate global adoption rates.

Finally, monetary policy by major central banks such as the Fed is likely to remain accommodative in 2025. The reason for this is that the Fed’s recent monetary policy actions have so far not led to a significant decline in US Treasury yields and have not eased financial conditions more broadly. This implies that the Fed, in particular, will have to make further rate cuts over the course of 2025, especially if the continued tightening of financial conditions starts to threaten the economic recovery. Meanwhile, global money supply has already broken out to new all-time highs, which tends to be a major tailwind for bitcoin and cryptoassets.

All in all, 2025 could potentially be another very successful year for bitcoin and cryptoassets.

Please remember that digital assets are highly volatile and when you invest in ETPs your capital is at risk.

• Bitwise Physical XRP ETP (GXRP) is a physically backed ETP that tracks the price of Ripple’s XRP governance token.

• ETC Group Core Bitcoin (BTC1) is a physically backed ETP designed to provide investors with a secure and cost-effective instrument to gain exposure to Bitcoin.

• ETC Group Ethereum Staking ETP (ET32) is a physically backed ETP that offers investors exposure to the performance of ETH, while capturing staking rewards.

• ETC Group MSCI Digital Assets Select 20 ETP (DA20) is a physically backed ETP that offers investors simple and cost-efficient access to the leading investable digital assets and cryptocurrencies comprising around 85% of the crypto market.

• ETC Group Physical Bitcoin (BTCE) is a physically backed ETP that tracks the price of Bitcoin.

• ETC Group Physical Cardano (RDAN) is a physically backed ETP that tracks the price of Cardano’s native platform token ADA.

• ETC Group Physical Ethereum (ZETH) is a physically backed ETP that tracks the price of Ethereum’s Ether coin.

• ETC Group Physical Litecoin (ELTC) is a physically backed ETP that tracks the price of Litecoin.

• ETC Group Physical Solana (ESOL) is a physically backed ETP that tracks the price of Solana’s cryptocurrency, Solana (SOL).

Professional investors only. Capital at risk.
Sources available upon request

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Bitcoin’s Year Ahead: Why 2025 Could Be a Halving Hit

﻿ “The adoption of cryptoassets could be supercharged by the US government’s plans to adopt bitcoin as a strategic reserve asset.”

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“The adoption of cryptoassets could be supercharged by the US government’s plans to adopt bitcoin as a strategic reserve asset.”