2024 has been an averagely great year for Bitcoin. This was the year that we saw the currency actually hit its highest value in history. Plus, other events like the Bitcoin halving in April drew the attention of many investors to the crypto industry. All these events and others that we’ll discuss in this article can significantly affect the future of cryptocurrencies.
So, if you are wondering what the Bitcoin price will be like in 2025, you have just arrived in the right place. And any serious investor will agree that investing your time in such knowledge can always give you a cutting edge in this industry where things keep changing. So, let us start our journey by looking at how things have been in the past.
The approval of Bitcoin ETFs
Early this year, crypto enthusiasts were met with good news after the American SEC approved several Bitcoin ETFs. The best part of these tokens is that they allow you to directly access Bitcoin’s price without necessarily buying, storing or managing the Bitcoin itself. They are quite similar to traditional ETFs, but they focus on Bitcoin as the underlying asset. After the approval of the SEC, eleven tokens went live on January 10, 2024.
And do you know what this approval led to? Daily ETF volumes increased to about $10 billion in March, making it the most popular ETF ever. Remember, these tokens make BTC investments more accessible because we said you don’t need to manage crypto wallets once you have them. Institutions also have a lot of benefits to reap, as they can diversify their portfolio to include Bitcoin since ETFs are more regulated and secure.
Such advantages made more investors join the market, leading to higher Bitcoin prices. In fact, the currency’s transfer volumes rose significantly during the week of the ETF’s approval. Experts claim that transfer volumes larger than $1 million increased the most, with the most significant institutional volume transfers witnessed in March.
Other trends that affected Bitcoin’s price in 2024
Well, if you thought March’s Bitcoin price was the highest that Bitcoin could go, you might actually need to think again. Just recently, it broke another record, hitting an all-time high of about $89,000. Most experts believe that Bitcoin could continue making strides due to the anticipated crypto-friendly environment in the United States. But given the highly volatile nature of crypto, you may need to keep a close eye on the industry lest you make the wrong choices.
But even before the recent highs, Bitcoin seemed to be doing quite well. Do you remember the US Federal Reserve rate cut that was announced around mid-September? Of course, there was a positive market reaction after the announcement confirmed that the target federal funds rate would be reduced by about 4.75% or 5%. In fact, that led to Bitcoin trading at about $64,000 on some platforms, a sharp increase of about $4,000 in just two days.
Just prior to this announcement, Bitcoin had just undergone the popular halving event in April, which aimed to regulate the coin’s supply. On the day this event happened, the currency registered a noteworthy gain and closed at $63,821. Should the currency increase in popularity and demand, the price of Bitcoin can actually continue to increase.
Are there any risks
Even though Bitcoin has been performing well of late, the importance of exercising caution can never be overstated. Just as the adage goes, ‘history repeats itself.’ Crypto assets – not just Bitcoin – have shown drastic swings that come suddenly, overnight, or over the weekend.
The point of this conversation is that you can lose money as quickly as you make it. For those who remember, just at the beginning of 2020, Bitcoin’s price was about $5,000. Who could have imagined this value would rise significantly to $69,000 the following year? This trend was, however, short-lived after the Federal Reserve hiked rates in an attempt to curb inflation. In 2022, a popular crypto exchange platform collapsed, reducing investor confidence and thus causing a drop in crypto prices.
Just at the beginning of last year, a single bitcoin would go for less than $17,000. However, that did not stop more investors from joining the market, as they would return in large numbers. As the year was coming to an end, the anticipation for the approval of ETFs continued to soar, welcoming more investors. By the time it was December, Bitcoin had exceeded the $40,000 mark. And now here we are, with the coin trading at $87,833 as of November 13, 2024.
According to Susannah Streeter, head of money and markets at Hargreaves Lansdown, you should only dabble in this industry with money you are ready to lose. Otherwise, the wild swings that characterize the market may frustrate you.
What about climatic effects?
Amid the soaring popularity of crypto, there are crucial debates like climate impact that might affect the token’s performance. In fact, Bitcoin mining has been completely banned in regions like China, partly because of its environmental consequences. Do you actually know that Bitcoin mining alone uses about 0.5% of all energy consumption globally? As if that were not enough, recent research reveals that the currency consumes about 91 terawatt-hours yearly – which is way higher than what Finland uses.
So, it is not surprising that sustainability-conscious individuals are concerned. A journal by the UN University and Earth’s Future revealed that emissions from 84 billion pounds of coal would be needed to equate with the carbon print of bitcoin mining across 76 nations.
In the United States, the EIA has expressed concern about the growing electricity demand due to crypto mining. The organization released a report early this year suggesting that crypto mining accounted for 0.6% to 2.3% of the country’s electricity consumption.
Such debates could actually affect the future of digital currencies. Just imagine what can happen if a top country like the US totally banned mining and the currencies themselves. A Guardian report indicated that prices dropped by almost 30% after the popular Chinese crypto ban. Therefore, such trends are something to look after before making investment decisions.
Growing competition from other tokens
For most people, what mostly came to mind when they heard about the mentions of crypto a few years ago was Bitcoin. Actually, in 2017, this token accounted for over 80% of the entire crypto market. But as the years have gone by, with hundreds of other tokens vying for investors’ attention, this figure has continued declining and was 57% as of October 2024.
Of course, more individuals have continued to learn about the abilities of alternative coins, which explains why Bitcoin is facing this much competition. Let’s take the example of Solana. Did you know that if you wanted a chain that could facilitate enormous transactions, Solana offers up to 65,000TPS? Ethereum, on the other hand, is convenient for decentralized finance applications.
And if you needed features that Bitcoin could not offer, what would you do? Turn to a rival token, right? The crypto industry is one of those sectors where innovation is the order of the day. We keep seeing new crypto introduced almost every day, which, in turn, puts more pressure on the popularity of Bitcoin. This could reduce the demand for tokens and consequently reduce their prices.
The role of tech advancements like AI
Which part of life has yet to experience the far-reaching effects of artificial intelligence? Ever since the launch of ChatGPT, many industries have been looking for new ways of utilizing AI to improve their experiences. For crypto enthusiasts, you must have seen AI bots that help predict crypto prices.
In fact, some experts, like Dominic Basulto, believe that artificial intelligence can improve the Bitcoin market. If Bitcoin became AI’s primary currency, its prices could greatly increase, according to Dominic.
Others, like Elias Manolopoulos, founder of Aeon Ads, believe that although AI has benefited Bitcoin in several ways, the benefits were more indirect. And as we have already hinted, many investors are taking advantage of this technology to analyze price movements and leverage market inefficiencies more actively.
Besides, artificial intelligence has also contributed to the popularity of decentralized autonomous organizations, which some believe has helped increase demand for this token. Something else we are also seeing is AI and bitcoin integrations.
Such collaborations could affect aspects like micropayments and AI-driven online economic agents. Have you heard of the Lighting Network? Now, first things first: As you may know, training AI models like GPT-4 to improve their performance can really be expensive, going to highs of $100 million and beyond.
The Lighting Network offers a great solution for this task, allowing for micropayments and low fees. That way, even smaller corporations can participate in AI development – not just restricting it to major organizations that have the needed financial muscle.
Companies like Applied Digital have already begun expanding towards AI cloud computing. Well, this is not really moving away from Bitcoin mining; it is a diversifying strategy to minimize dependence on the currency’s market fluctuations. Hub 8 is also not left behind. The company has invested in Nvidia GPU-equipped data centers that can handle different workloads like Bitcoin rigs and machine learning. Such advancements could affect the currency’s price as more individuals are likely to join the market.
Parting words: should you invest?
There is no one-size-fits-all answer to the question of whether or not you should invest. Given the volatile nature of crypto, it is very difficult to determine what the prices of currencies might be in the coming days.
As noted, there have been instances in history when Bitcoin was doing well, and then, when something happened, prices declined unusually. That is the most painful part of digital currencies. What was, say, $100,000 today could unusually drop to $10,000 overnight. That is why we emphasize the need to exercise caution and only invest what you are willing to lose, as some experts advise.
