Bitcoin: Torn Between Bull Runs And Bear Plunges, Extreme Volatility Ahead

Summary Bitcoin's price is projected to range between USD 70,000 and USD 150,000 in 2025, with extreme volatility expected due to market dynamics and geopolitical shifts. Institutional adoption, political legitimacy, and first-mover advantage are key factors driving Bitcoin's momentum, creating a complex game theoretical landscape. The recent pullback to USD 91,315 and subsequent recovery above USD 100,000 highlight Bitcoin's characteristic volatility and resilience. Any turmoil in the stock markets will put Bitcoin prices at very high risk as Bitcoin is more closely correlated with US stock markets than ever before. AI and blockchain convergence, Proof-of-Personhood systems, and stablecoin adoption are anticipated to significantly impact the crypto landscape in 2025. As we enter 2025, Bitcoin finds itself at yet another critical juncture, navigating a complex landscape of unprecedented institutional interest, regulatory shifts, and market expectations. The cryptocurrency has already surpassed the USD 100,000 milestone, yet analysts unanimously predict a year of dramatic price swings. With price target projections ranging from USD 150,000 to USD 200,000, Bitcoin ( BTC-USD ) and all those new Bitcoin spot ETFs like IBIT , FBTC , BITO , ARKB , BITB , HODL , BRRR , EZBC , ARKW , BITX , BTF and as well as the Grayscale Bitcoin Trust ( GBTC ) stand poised between exhilarating bull runs and potential sharp corrections, embodying the inherent volatility that has defined its remarkable journey. The current market dynamics suggest a perfect storm of factors - including spot ETF inflows, potential U.S. strategic reserve considerations, and nasty waves of profit taking in the stock market, that could propel Bitcoin to new heights while simultaneously exposing it to significant market turbulences. Game Theory Dynamics Propelling Bitcoin's Momentum Given Bitcoin's unprecedented presence and political relevance, the growing influence of Bitcoin is creating a complex game theoretical landscape that compels influential players to take the cryptocurrency seriously. This dynamic is driven by several interconnected factors: Institutional Domino Effect: As major institutions adopt Bitcoin, it creates a cascading effect where others feel compelled to follow suit to avoid being left behind. Political Legitimacy: Support from the new U.S. administration lends Bitcoin additional legitimacy and credibility, making it riskier for governments and corporations to ignore or dismiss the technology. First-Mover Advantage: The potential economic benefits of early adoption exert pressure on decision-makers to engage with Bitcoin proactively. Opportunity Cost: Global attention on Bitcoin raises the stakes of inaction, as significant developments and opportunities could be missed by those who choose to remain on the sidelines. Network Effects: As Bitcoin's user base grows, its utility and value proposition strengthen, further incentivizing adoption. These factors collectively create a game theoretical scenario where ignoring Bitcoin becomes increasingly untenable for many players. While the long-term implications of these developments remain uncertain, the current dynamics are undeniably accelerating Bitcoin's integration into mainstream finance and politics. Technical Analysis for Bitcoin in US-Dollar Weekly Chart: First cup-and-handle price target already achieved Bitcoin in USD, weekly chart as of January 7th, 2025 (TradingView) Starting from the crash low on August 5th at USD 49,577, Bitcoin was able to rise by around 120% over the last five months. The breakout above the resistance zone between USD 73,000 and 75,000 in November brought the final end to the tenacious consolidation phase that had lasted several months. This breakthrough caused a sharp rally and overran all obstacles. In a manner typical for Bitcoin, there was a direct march through to the first price target from the large cup-and-handle formation at USD 98,000 to USD 100,000. The second price target from this formation at USD 130,000 is still pending, however, and could be targeted in the course of 2025. Interestingly, the sharp pullback over the last two weeks in 2024 has not led to a sell signal on the weekly stochastic oscillator. Accordingly, the breather might already be over. Alternatively, however, the entire leg up of the last five months will be corrected. In particular, the weakening stock markets and the faltering Bitcoin dominance, which briefly fell significantly at the beginning of December, suggest a somewhat larger pullback might still be possible. Bitcoin CME future contract with open gap Bitcoin Future in USD, weekly chart as of January 7th, 2025 (TradingView) In the Bitcoin CME future contract, the explosive Trump rally has left an open price gap between USD 77,930 and USD 80,670. It wouldn't be surprising if this price gap still needs to be closed. This could test the successful breakout from the cup-and-handle formation, and subsequently, the continuation of the Bitcoin rally would stand firmly on two legs. Overall, the weekly chart remains bullish. The overarching uptrend is clearly established and not at risk. However, the weakness in the second half of December, combined with the roller coaster ride in the stock markets, calls for some caution. After all, thanks to Wall Street and the numerous Bitcoin ETFs, the Bitcoin price is more closely correlated than ever before with the fate of the stock markets. Daily Chart: Strong support zone above 90,000 USD Bitcoin in USD, daily chart as of January 7th, 2025 (TradingView) Although the bears tried hard for 16 trading days, they have only made very slow and sluggish progress. As a result, the stochastic oscillator has penetrated deep into its oversold zone. The bounce since the beginning of the year immediately generated a new buy signal, and the stochastic oscillator still has quickly reached its overbought zone again. As well, the upper Bollinger Band (USD 101,947) has been reached. Accordingly, after a quick and impressive bounce, the air is getting a bit thin again for Bitcoin. However, if the low, seen on December 30, 2024, was a larger turning point, Bitcoin should already be on its way to new all-time highs. Overall, the daily chart is bullish thanks to the recent stochastic buy signal. However, the daily chart is overbought too. Hence, we would not be surprised if Bitcoin needs some time to digest the bounce of the last seven days. Bitcoin Sentiment - A bit too optimistic Crypto Fear & Greed Index, as of January 2nd, 2025 (Bitcoin Magazine Pro.) The "Crypto Fear & Greed Index" is currently at 70 out of 100 points. The pullback had at least partially cooled the mood in the last two weeks of 2024. However, there is certainly not a contrarian buy signal. CMC Crypto Fear & Greed Index, as of January 4th, 2025 (Coinmarketcap) In CoinMarketCap's "CMC Crypto Fear & Greed Index", sentiment had shifted significantly more towards "neutral". Thanks to the recovery of the last few days, the sentiment barometer is again in the "greed range". Overall, the current market sentiment requires a differentiated view. Despite the significant price drop to around USD 91,351, the general mood among investors remained too optimistic. At the same time, the pullback created enough skepticism for a significant price recovery. On top, Jim Cramer and Christian Lindner are also causing skepticism. The former German finance minister has spoken out in favor of a Bitcoin reserve for the European Central Bank (ECB), which puts him in the steadily growing circle of political actors who are opportunistically joining the Bitcoin herd instinct. This development is strongly reminiscent of the end of the Bitcoin euphoria of 2021, when numerous public figures demonstrated their support for Bitcoin by using "laser eyes" in their social media profile pictures. Bitcoin Seasonality - Seasonality turns neutral to slightly negative Bitcoin Seasonality as of January 4th, 2025 (Seasonax) Bitcoin has adhered to seasonal guidelines in an exemplary manner last year. Since the new all-time high in March, prices have corrected and, as expected, reached an important low of just under USD 50,000 at the beginning of August. After a tenacious bottoming phase in August and September, the next wave up began in mid-October. In the past, however, the turn of the year usually brought somewhat weaker prices for January. According to the seasonal pattern, the pullback that begun in mid of December could therefore continue until the end of the month. In summary, the seasonal component in the first few weeks of the new year is somewhat unfavorable for Bitcoin. Sound Money - Bitcoin vs. Gold /Gold-ratio, daily chart as of January 7th, 2025 (TradingView) Overall, the Bitcoin/gold ratio confirms the strong buy signal for Bitcoin against gold. The pullback from 41 to 35.5 in the last weeks of 2024 had created a strongly oversold situation on the daily chart, from which Bitcoin was able to recover quickly against the gold price. On the weekly chart shown, the uptrend is intact, and the stochastic oscillator continues to move bullishly embedded above 80 with both signal lines. Macro Update - Highly complex situation is likely to bring significantly increased volatility for 2025 Shanghai Shenzen CSI 3000 Index, as of January 2nd, 2025 (Holger Zschäpitz) At the start of the new year, the Chinese CSI 300 Index ( SHSZ300 ) recorded its sharpest decline on the first trading day since 2016, with a daily loss of 2.9%. Given that the CSI 300 lost 11.3% overall in 2016, this first trading day could be indicative of the year's trend. The German DAX also experienced a wild roller coaster ride on the first two trading days, not making the healthiest impression. The Dow Jones ( DIA ) is already trading about 5.3% below its all-time high from December 4th, while the S&P 500 ( SPY ) and especially the NASDAQ ( NDAQ ) appear somewhat more robust. Bitcoin corrects 15% within two weeks Bitcoin retreated from its new all-time high by a substantial 15% to USD 91,315 in less than two weeks, but is now back above the psychological mark of USD 100,000. So far, this looks like a normal consolidation or healthy pullback around this major psychological level. US stocks against gold, as of December 31st, 2024 (Bloomberg Intelligence) Gold, on the other hand, has been demonstrating fundamental strength throughout 2024. In mid-December, as expected, support around USD 2,600 was successfully defended again. Gold ( XAUUSD:CUR ) as well as the SPDR Gold Trust ETF ( GLD ), the iShares Gold Trust ETF ( IAU ) and Sprott Physical Gold Trust ( PHYS ) not only convince with new upward momentum at the start of the year, but has been outperforming the S&P 500 since 2021. This fact increasingly points to deflationary tendencies in the global financial system as a possible early indicator. Whether the precious metal will beat stocks again in 2025 could therefore be one of the most important macroeconomic questions. The current situation, after the fading of the major Covid liquidity injections, is quite similar to the dangerous situations of 1999/2000 and 2006/2007. Gold's resilience and fundamental strength remain remarkable, having held up well despite the significantly stronger US dollar in recent weeks and merely consolidating sideways the gains made since late October. Jim Rogers and Warren Buffett have drastically reduced their US stock exposure Overall, global financial markets are facing increased risk and susceptibility to profit-taking after the steep and partially bubble-like price increases in US tech stocks. Hence, significantly increasing volatility is likely to make life much more difficult for investors across all asset classes this year. However, if strong turbulence causes enough skepticism and uncertainty, the year-end balance could still show a plus in the stock markets thanks to loose monetary policies around the globe. At least in the short term, the upcoming change of power in America could cause the stock and especially the crypto markets to boom again in the course of the "post-election pump". Overheated US tech stocks are vulnerable in 2025 Buffett Indicator, as of September 30th, 2024 (Gramalam, LLC.) Yield curve model, as of September 30th, 2024 (Gramalam, LLC.) Their caution is reflected in concrete actions: Rogers has sold all his US stocks and is even considering shorting stocks, while Buffett has been a net seller of stocks for eight consecutive quarters. Buffett has also sold his positions in companies such as Floor & Decor Holdings ( FND ), Paramount Global ( PARA ), and Snowflake ( SNOW ). Instead, he is diversifying his portfolio by investing in other sectors. For example, he bought the railroad company Burlington Northern Santa Fe for USD 44 billion. These risk minimization measures and the search for alternative investment opportunities underscore the concern of these two renowned investors about current market conditions and valuations in the US stock market. 10 stocks account for 40% of market capitalization Should there be a deflationary shock or even a bear market in the stock markets, not only these tech stocks but especially the Bitcoin price would be at very high risk. After all, Bitcoin is more closely correlated with US stock markets than ever before. In particular, the election of Donald Trump as US President and his crypto-friendly stance have positively influenced both the crypto and traditional financial markets. At the same time, the introduction of Bitcoin spot ETFs in the US has made it easier for institutional investors to invest in Bitcoin, closely intertwining it with the traditional financial sector. Macroeconomic factors such as US monetary policy now equally influence both markets, with loose monetary policy naturally favoring risky assets like Bitcoin. Moreover, the Bitcoin market is increasingly following the 4-year cycle of the US presidential campaign, which also influences stock markets. The growing perception of Bitcoin as an alternative store of value contributes to the cryptocurrency reacting more strongly to macroeconomic factors that also affect stock markets. Increasing Divergence Between East and West In contrast, the other half of the world's population in the eastern part of the planet (China, Russia, and India, or Asia, the Middle East, and parts of Africa) is increasingly distancing itself from Western values, treaties, and trade relations, opting instead to purchase physical gold. This growing divergence between the East and the West in terms of economic strategies and asset preferences is a complex phenomenon that is likely to shape both financial and geopolitical landscapes in the coming years and possibly decades. While central banks in Asia and Eastern Europe are increasingly emerging as major gold buyers, and countries such as South Sudan, Zimbabwe, and Nigeria are increasing their gold reserves to protect against currency losses, the West is focusing more on technological innovations and digital assets. Thanks to high investments in future technologies and digitalization, the West is experiencing a new "founding era", which, however, primarily leads to high-growth rates and new corporate giants in the USA and Asia. The future will show which strategy proves to be more sustainable. In any case, this divergence intensifies geopolitical tensions and growing mistrust between East and West. Possibly, a combination of both approaches - stability through traditional assets like gold and innovation through technology and digital assets - will be the key to balanced global economic development and a new economic order. In particular, there is an urgent need in Europe and Germany to unleash new innovative power through free markets and deregulation while simultaneously ensuring the stability of economic systems. Otherwise, Germany and Europe will have no chance in global competition. Conclusion: Bitcoin - Torn Between Bull Runs And Bear Plunges, Extreme Volatility Ahead Driven by technological advancements, regulatory developments, and changing market dynamics, the crypto industry will continue to evolve at a breathtaking pace in 2025. Artificial Intelligence "AI" will play a key role in reshaping the crypto landscape, with AI agents potentially owning their own wallets, autonomously conducting transactions, and even managing blockchain networks. This convergence of AI and blockchain is expected to contribute an estimated USD 1.76 trillion to global GDP by 2030, revolutionizing areas such as decentralized finance (DeFi), predictive analytics, and fraud prevention. Proof-of-Personhood (PoP) systems are likely to gain significance this year to verify human uniqueness and combat deepfakes and fraud attempts. These systems aim to establish digital identities while preserving privacy, possibly utilizing advanced technologies such as iris recognition. A surge in stablecoin adoption is anticipated, with businesses from small cafes to global corporations using crypto infrastructure to reduce transaction costs. However, USDT (Tether) has disappeared from most European crypto exchanges as of December 30th, 2024, due to MiCA regulations. So far, the consequences for crypto trading in Europe have been manageable. Decentralized Autonomous Chatbots (DACs) could become a potential growth driver. Chatbots operating on decentralized and permissionless systems, coordinated through a consensus protocol, could create the first truly autonomous billion-dollar company in the bot economy through the integration of artificial intelligence with blockchain technology. Bitcoin 2nd Bull-run within the cycle (AurelienOhayon) Price-wise, Bitcoin is likely to move in a large trading range between approximately USD 70,000 and USD 150,000 this year. We are confident that the second price target from the four-year cup-and-handle pattern at around USD 130,000 can be reached during the course of this year. However, we fear that the volatility will become extreme. Hence, our title Bitcoin - Torn Between Bull Runs And Bear Plunges, Extreme Volatility Ahead.