Author: Matt Crosby, Bitcoin Magazine; Translated by: Wu Zhu, Golden Finance
As we move into 2025, it is time to take a cautious approach to predicting Bitcoin's trajectory this year. By considering on-chain data, market cycles, macroeconomic data, and more, we can move beyond pure speculation to paint a data-driven picture for the upcoming months.
MVRV Z Score: Significant Upside Potential
The MVRV Z score measures the ratio between Bitcoin's actual price (the average acquisition price of all BTC on the network) and its market capitalization. Normalizing this ratio for volatility provides the Z score, which historically reflects market cycles clearly.
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. While the Z score reached above 7 in previous cycles, I believe any score above 6 indicates overextension, prompting us to examine other indicators more closely to determine market peaks. We are currently hovering at levels comparable to May 2017, when Bitcoin's value was only a few thousand dollars. Considering historical context, there remains hundreds of percentage points of potential upside from current levels.
PI Cycle Oscillator: Bullish Momentum Resumes
Another important indicator is the Pi cycle top and bottom indicator, which tracks the 111-day and 350-day moving averages (the latter multiplied by 2). Historically, when these averages cross, it often signals that Bitcoin's price will peak within a few days.
Figure 2: The macro trend remains bullish.
The distance between these two moving averages has begun to trend upward again, indicating a resurgence of bullish momentum. Although 2024 experienced a period of horizontal consolidation, the breakout we are currently seeing suggests that Bitcoin is entering a stronger growth phase that may last for several months.
Exponential Phase of the Cycle
From Bitcoin's historical price trends, cycles typically have a 'post-halving cooling period' lasting 6-12 months, followed by an exponential growth phase. Based on previous cycles, we are nearing this breakout point. Although returns are expected to be lower compared to previous cycles, significant growth can still be anticipated.
Figure 3: Compared to previous bull markets, we are approaching the most bullish phase of the cycle.
For context, breaking the historical high of $20,000 in the 2020 cycle led to Bitcoin reaching a peak value near $70,000, a 3.5x increase. If we see Bitcoin's price rise 2x or 3x from the previous $70,000 peak, Bitcoin could potentially reach $140,000-$210,000 in this cycle.
Macroeconomic factors supporting BTC in 2025
Despite facing resistance in 2024, Bitcoin has performed strongly, even in the face of a strengthening U.S. dollar index (DXY). Historically, Bitcoin and DXY have moved inversely, so any reversal in a strong DXY could further propel Bitcoin's rise.
Figure 4: Even with a significant rise in DXY, BTC has also increased.
Other macroeconomic indicators, such as the high-yield credit cycle and global M2 money supply, indicate that Bitcoin's conditions are improving. The expected contraction in money supply in 2024 is likely to reverse in 2025, laying the foundation for a more favorable environment.
Cycle Master Chart: A Long Way to Go
Bitcoin Cycle Master Chart summarizes multiple on-chain valuation indicators, showing that there is still considerable growth potential before Bitcoin reaches overvaluation. The upper limit is currently around $190,000 and continues to rise, enhancing the prospects for sustained upward momentum.
Figure 5: The 'overvalued' level of the Cycle Master has exceeded $190,000.
Summary
Currently, almost all data points favor 2025. As always, past performance is not indicative of future results, but the data suggests that even after an incredibly positive 2024, Bitcoin's best days may still lie ahead.
