Author: Matt Crosby, Bitcoin Magazine; Translated by: Wu Zhu, Jinse Finance
As we step into 2025, it is time to take a prudent approach to predict Bitcoin's trend this year. Considering on-chain data, market cycles, macroeconomic data, and other factors, we can move beyond mere speculation to paint a data-driven picture for the coming months.
MVRV Z Score: Huge 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 value. Normalizing this ratio for volatility yields the Z score, which historically has clearly reflected market cycles.
Figure 1: 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 that any score above 6 indicates excessive expansion, prompting us to examine other indicators more closely to determine market peaks. At present, we are hovering at levels comparable to May 2017, when Bitcoin was valued at only a few thousand dollars. Considering the historical context, there remains hundreds of percentage points of potential gain 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: Macroeconomic trends remain bullish.
The distance between these two moving averages has begun to trend upwards again, indicating a resurgence of bullish momentum. Although 2024 experienced a period of lateral consolidation, the breakthrough we see now suggests that Bitcoin is entering a stronger growth phase, which could last for months.
Index phase of the cycle
Historically, the price trajectory of Bitcoin shows that 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 breakthrough point. Although returns are expected to be lower compared to previous cycles, we can still anticipate significant growth.
Figure 3: Compared to previous bull markets, we are nearing the most bullish phase of the cycle.
As a backdrop, the breakthrough of the historical high of $20,000 in the 2020 cycle led Bitcoin's price to peak near $70,000, a rise of 3.5 times. If we see Bitcoin's price rise 2 to 3 times from the previous peak of $70,000, then Bitcoin could potentially reach $140,000 to $210,000 in this cycle.
Macroeconomic factors supporting BTC in 2025
Despite facing resistance in 2024, Bitcoin is performing strongly, even in the context of a strengthening Dollar Index (DXY). Historically, Bitcoin and DXY have shown opposite trends, so any reversal in the strengthening of DXY could further propel Bitcoin's rise.
Figure 4: BTC has shown an increase even with a significant rise in DXY.
Other macroeconomic indicators, such as high-yield credit cycles and global M2 money supply, indicate that the condition of Bitcoin is improving. The contraction in money supply expected in 2024 is anticipated to reverse in 2025, laying the groundwork for a more favorable environment.
Cycle Master Chart: Heavy Lifting Ahead
The Bitcoin Cycle Master chart summarizes several on-chain valuation indicators, showing that Bitcoin still has considerable room for growth before reaching 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 Cycle Master has surpassed $190,000.
Summary
Currently, almost all data points are optimistic for 2025. As always, past performance is not indicative of future results, but the data suggest that even after an incredibly positive 2024, Bitcoin's best days may still lie ahead.
