Even with the recent volatility, Bitcoin’s immediate and long-term future looks attractive.

It may not seem like it, but Bitcoin (BTC 1.16%) is on track to hit a new all-time high by 2025. Even with the recent dip and its inability to gain any substantial momentum, the cryptocurrency is following a similar pattern as in previous years when it reached new highs.

As for what path it will take between now and then, only time will tell, but with a little number crunching, it will become clear that 2025 is shaping up to be a big year for the world’s original cryptocurrency.

Image source: Getty Images.

The patterns are becoming clear

Bitcoin has demonstrated clear and notable price patterns throughout its history, occurring over four years. Typically, what we see is a bear market like the one in 2022, a notable recovery the following year, continued progress in the third year when the reducing by half occurs and then a cyclical peak occurs in the year following the halving.

We are currently in the third year, the year of the halving. And Bitcoin appears to be following the traditional four-year pattern this time, just as it has in recent cycles. This means we can use some of its historical performance to get an idea of ​​what 2025 holds.

Looking to 2025

Past performance, of course, is no guarantee of future results. But a little speculation can be healthy and help us assess overall long-term potential. That said, back to the four-year model.

In years when a halving occurs, Bitcoin increases by around 125% on average. If this is true this year, then it means we can expect to see Bitcoin reach almost $100,000 by the end of 2024. This price was derived by calculating a 125% increase in the price of Bitcoin at the beginning of the year, which was of US$44,000.

So let’s jump to the end of 2024 and the beginning of 2025. On average, in the year after a halving, Bitcoin returns an incredible 400%. The most obvious reason for this monumental performance during these years is that the market starts to adjust to the halving, which means that in these years the supply shock finally materializes. If this happens again and Bitcoin ends 2024 in line with the historical average, that would put its price at around $500,000 in 2025.

Final considerations to keep in mind

Before closing, it is worth highlighting that, as fanciful as this number may seem, Bitcoin often exceeds expectations in bull markets. He made a name for himself doing this. So while $500,000 may seem absurd, stranger things have happened. For example, cryptocurrency jumped 850% in 2011.

But to be completely honest, whether or not Bitcoin will reach that price by 2025 shouldn’t really matter to investors. What’s crucial is understanding the long-term dynamics that make it a unique investment. The price is driven by its supply and demand dynamics, which are changing favorably over the years.

For example, its supply is limited to 21 million coins (19.7 million are now in circulation), and this scarcity is one of its defining characteristics. And demand is increasing. Institutional interest has increased in recent years and the introduction of Bitcoin spot exchange-traded funds will further democratize access. Retail interest also remains strong, with an increasing number of individuals looking to it as a store of value.

Then there’s Bitcoin’s decentralized nature and its growing role in a world where trust in traditional financial systems is faltering. Digital currency offers an alternative that isn’t subject to government control or monetary policy, a growing luxury. fiat currencies continue to inflate.

Investors would do well to focus on these dynamics rather than fixating on precise price targets. Bitcoin’s potential to redefine finance and serve as a robust store of value remains strong, making it an attractive investment, especially as it undergoes a pronounced sell-off.

RJ Fulton has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.

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