Written by: Bitcoin Magazine Pro
Compiled by: Vernacular Blockchain
As we move into 2025, it is time to examine the potential scenarios Bitcoin may face this year in a rational and analytical manner. By combining on-chain data, market cycles, macroeconomic data, and other factors, we can transcend mere speculation and paint a data-driven picture for the coming months.
1. MVRV Z-Score: Huge Upside Potential
The MVRV Z-Score measures the ratio between Bitcoin's realized price (the average purchase price of all Bitcoins in the network) and its market capitalization. By normalizing the volatility of this ratio, we obtain the Z-Score, which has historically provided a clear representation of market cycle trends.
Figure 1: The MVRV Z-Score shows we have a long way to go before reaching the market cycle peak.
Currently, the MVRV Z-Score indicates that we still have significant upside potential. Although the Z-Score has exceeded 7 in previous cycles, I believe that any value above 6 signifies market overextension and requires a more careful observation of market peaks in conjunction with other indicators. Currently, our level is comparable to May 2017, when Bitcoin's price was only a few thousand dollars. Considering the historical context, there is still potential for several hundred percentage points of upside from current levels.
2. Pi Cycle Oscillator: Bullish Momentum Recovery
Another key indicator is the Pi Cycle top and bottom indicators, which track the 111-day and 350-day moving averages (the latter multiplied by 2). Historical data shows that when these two moving averages cross, it usually signals that Bitcoin's price will peak within a few days.
Figure 2: Macro trends remain bullish.
The distance between these two moving averages is starting to rise again, indicating that bullish momentum is recovering. Despite experiencing several phases of range consolidation in 2024, the current breakthrough suggests that Bitcoin is entering a stronger growth phase that may last for several months.
3. Exponential Growth Phase of the Cycle
From the historical price trends of Bitcoin, the cycle typically lasts 6 to 12 months in the 'post-halving cooling' phase before entering an exponential growth phase. Based on historical cycle data, we are approaching this breakthrough point. Despite a potential decrease in returns compared to earlier cycles, we may still see significant gains.
Figure 3: We are approaching the most bullish phase of the cycle compared to previous bull market cycles.
As background information, after breaking the previous historical high of $20,000 during the 2020 cycle, Bitcoin's price peaked at nearly $70,000, an increase of 3.5 times. If we conservatively estimate a growth of 2 to 3 times from the previous peak of $70,000, Bitcoin could realistically reach between $140,000 and $210,000 in this cycle.
4. Macroeconomic Factors Supporting Bitcoin's Performance in 2025
Despite facing some resistance in 2024, Bitcoin continues to perform strongly, even in the context of a strengthening US Dollar Index (DXY). Historically, Bitcoin's movements are usually inversely related to the DXY, so if the DXY shows a strong reversal, it could further boost Bitcoin's upward potential.
Figure 4: Even with a significant rise in the US Dollar Index, Bitcoin continues to rise.
Other macroeconomic indicators, such as high-yield credit cycles and global M2 money supply, suggest that the market environment for Bitcoin is improving. The monetary supply contraction expected in 2024 is anticipated to reverse in 2025, laying the groundwork for a more favorable market environment.
5. Main Cycle Chart: There's Still a Long Way to Go
The Bitcoin main cycle chart consolidates multiple on-chain valuation indicators, showing that there is still considerable room for growth before reaching overvaluation. The current upper limit is around $190,000, and this upper limit continues to rise, further strengthening the outlook for sustained upward momentum.
Figure 5: The 'Overvaluation' level of the main cycle chart has exceeded $190,000.
6. Conclusion
Currently, almost all data indicators point to a bullish 2025. As always, past performance does not guarantee future results, but the data strongly suggests that Bitcoin's best times may still be ahead, even in the context of an already exceptionally positive 2024.
