Could Bitcoin Cap a Milestone Year with a Santa Rally? $200,000 Target by 2025 in Sight?

$Bitcoin (BTC.CC)$ breached the $105,000 mark for the first time during Asia's early trading hours on Monday and briefly touched $107,000 in North America. As of publishing, Bitcoin was trading over $107,000, marking a more than 7% increase over the past five days.

This recent surge is attributed to former President Donald Trump reiterating plans to establish a U.S. Bitcoin Strategic Reserve, coupled with robust capital inflows into the Bitcoin market.

According to SoSoValue, ETF inflows for the week ending December 12 were $2.17 billion, bringing total net assets to $114.97 billion. On Monday, $MicroStrategy(MSTR)$   announced it had purchased 15,350 BTC at an average price of $100,386 per Bitcoin, totaling $1.5 billion.

Meanwhile, cryptocurrency mining companies saw significant gains on Monday, with $Cipher Mining (CIFR.US)$ rising over 20%, $TeraWulf (WULF.US)$ up more than 17%, $Bitdeer Technologies (BTDR.US)$ increasing over 10%, and $Marathon Digital Holdings Inc(MARA)$    and $Riot Platforms (RIOT.US)$ each climbing over 8%.

2024: A Milestone Year for Bitcoin

Since the start of 2024, Bitcoin has soared over 150%, with a market cap exceeding $2 trillion, surpassing silver and Saudi Aramco to become the world’s seventh-largest asset. 

Key events catalyzing this year's bull market include the approval of Bitcoin spot ETFs in January, the halving event in April, the onset of a rate-cut cycle in September, Trump's election victory in November, and the appointment of crypto-friendly Paul Atkins as SEC Chairman in December. Post-election, Bitcoin surged from $70,000 to break the $100,000 barrier.

Diversified investment channels, improved market liquidity, and a favorable regulatory outlook have driven substantial capital into Bitcoin. The Bitcoin ETF, launched less than 10 months ago, has already surpassed $100 billion in size, reaching 82% of U.S. gold ETF levels. Additionally, Federal Reserve Chair Jerome Powell’s December speech likening Bitcoin to digital gold pushed the Bitcoin-to-gold ratio to historic highs.

In the Bitcoin rally, cryptocurrency stocks have also had a banner year. MicroStrategy, the listed company holding the most Bitcoin, owns 439,000 BTC valued at approximately $46.5 billion, about 2% of Bitcoin's total market cap. Its stock has surged 540% year-to-date. Mining firms like $TeraWulf (WULF.US)$ and $Bit Digital (BTBT.US)$ have risen over 240% and 130%, respectively, while $Hut 8 (HUT.US)$ and $IREN Ltd (IREN.US)$ have gained over 117% and 94%, with $Coinbase (COIN.US)$ up more than 80%.

Santa Rally on the Horizon?

This week's key event for Bitcoin is the Federal Reserve's December rate decision on Wednesday. Rate cuts typically benefit risk assets like Bitcoin, which has gained over 75% since the first rate cut in September.

The market widely expects a 25-basis-point cut, with the meeting's focus on future rate path commentary. The Fed's predictions for 2025's rate trajectory could influence Bitcoin market dynamics. If the Fed anticipates a slower or reduced pace of rate cuts next year, U.S. Treasury yields might strengthen, diminishing Bitcoin's appeal to investors.

According to Barchart, options traders are currently targeting Bitcoin at $120,000, betting on continued price increases.

Independent Bitcoin researcher and investor Timothy Peterson estimates Bitcoin's price is likely to reach $115,000 based on "ETF fund flows."

Investors should note that CryptoQuant data indicates leverage ratios are at a record high, suggesting a potential market correction.

2025: Bitcoin's Year to Double?

Looking ahead to 2025, the demand explosion from Bitcoin spot ETFs, reduced Bitcoin supply post-halving, rate-cut cycles, and favorable regulations are expected to sustain Bitcoin's strength.

Bernstein analysts recently reiterated their 12-month Bitcoin price target of $200,000, noting "The supply-demand imbalance is stark," highlighting rapid acquisitions by ETFs and corporate buyers.

Wedbush Securities'Global Head of Technology Research, Daniel Ives, suggested Bitcoin "potentially doubling" by the end of 2025 is within the realm of possibility.

Fundstrat Global Advisors' Head of Research, Tom Lee, who accurately predicted Bitcoin reaching $100,000 this year, anticipates Bitcoin hitting $250,000 in 2025, implying roughly 150% upside from current levels.

However, Lee cautions that while Bitcoin has doubling potential, its ascent may face setbacks. He expects a possible pullback in early 2025 before another upward move.

Investors should note that the White House's support for cryptocurrency policies may roll out more slowly than anticipated, potentially leading to market disappointment and price adjustments.

For those optimistic about Bitcoin's rally in 2025, participating in the uptrend can be achieved through trading Bitcoin-related stocks or options. Stocks like $MicroStrategy (MSTR.US)$ and $TeraWulf (WULF.US)$ may offer even greater upward potential than Bitcoin itself.

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