By Brett Munster
At the start of 2023, we highlighted data suggesting that the market had bottomed a month earlier at $15,500. At that time, bitcoin was trading around $17,000. By year’s end, BTC had surged 158% to over $44,000, affirming our thesis. At the start of 2024, we followed up with The Bull Case for Bitcoin, outlining why we believed bitcoin was primed for another strong performance in 2024. As of writing this, bitcoin is up an impressive 132% this year. While these gains have been remarkable, the outlook for 2025 appears even more compelling—potentially the strongest setup I’ve seen in over a decade of investing in this asset class.
As 2024 draws to a close, we are excited to continue our tradition of presenting the annual Bull Case for Bitcoin. This year, we outline why 2025 could mark another transformative chapter for BTC and the broader crypto market. Historical trends, evolving regulatory landscape, a potential global arms race, macro tailwinds, and supply/demand dynamics all point to a year of extraordinary potential.
Historical Cycles Suggest Another Strong Year in 2025
Historically, the cryptocurrency market has followed a four-year cycle. Year one typically serves as a consolidation phase after a market bottom (e.g., 2011, 2015, 2019, 2023), setting the stage for moderate growth in year two (e.g., 2012, 2016, 2020, 2024). By year three, the market often enters a “mania phase,” characterized by explosive growth (e.g., 2013, 2017, 2021), which is usually followed by a significant correction or crash in year four (e.g., 2014, 2018, 2022). If this cycle continues to persist, that would suggest 2025 would be the year of high-growth “mania phase.”
Adding credence to this theory is the fact that bitcoin’s price increase from its 2022 lows mirrors patterns from earlier cycles, strengthening the argument that history may repeat. While past performance doesn’t guarantee future results, the consistency of this pattern provides a compelling framework for understanding bitcoin’s potential trajectory.
However, history alone isn’t enough to drive bitcoin’s price higher—it’s the underlying catalysts within these cycles that ignite and sustain growth. Factors such as regulatory clarity, shifting macroeconomic conditions, supply and demand imbalances, and even the prospect of a global race among nations to accumulate bitcoin could all converge to fuel the next major bull run. In the following sections, we’ll dive into these key drivers and examine why history just might repeat itself once more in 2025.
A Regulatory Shift from Antagonistic to Supportive
Over the past two years, the U.S. regulatory landscape has been defined by an aggressive crackdown on the cryptoasset industry. Federal agencies, led by the SEC, unleashed lawsuits and issued Wells Notices against numerous crypto firms. The SEC also introduced SAB 121, effectively barring banks from custodying crypto assets—a measure reaffirmed by the White House despite strong bipartisan opposition in Congress. The FDIC forcibly shuttered crypto-friendly banks like Silvergate and Signature, even though both were solvent, while issuing warnings to other banks against serving crypto companies. This orchestrated effort, dubbed “Chokepoint 2.0,” debanked the entire industry. Senator Elizabeth Warren fueled the narrative with debunked claims of crypto financing terrorism and pledging to build an “anti-crypto army.” Meanwhile, bipartisan legislation, including stablecoin and market structure bills, was blocked by Congressional leaders such as Senator Sherrod Brown. The administration added to the hostility by sanctioning crypto privacy tools, proposing a punitive 30% tax on crypto mining, and warning of systemic risks posed by digital assets.
Despite this, bitcoin’s resilience shone through, with adoption among Americans reaching record high levels and prices climbing over 600% from late 2022 lows.
In 2024, the tide began to shift. Courts repeatedly ruled against the SEC, exposing the overreach of its enforcement actions. The November election marked another turning point, ushering in a crypto-friendly administration and Congress. For the first time, an elected U.S. president explicitly campaigned on a pro-bitcoin platform, promising to dismantle regulatory barriers, foster crypto innovation, and position the U.S. as a leader in the digital economy.
Since taking office, Trump has reiterated these commitments. According to Axios, he has expressed interest in bitcoin’s price, reportedly setting an informal target of $150,000 early in his presidency. While this figure is speculative, it underscores that Trump is actively viewing the price of bitcoin as one measure of success for his presidency.
The shift extends to Congress, where over 60% of lawmakers are now publicly supportive of cryptocurrency. French Hill, who has been one of the most vocal crypto supporters in the House for years, will be leading the House Financial Services Committee, one of the most powerful committees in Congress. In the Senate, Tim Scott, the new head of the Senate Banking Committee, has spoken extremely positively about crypto and the urgent need for legislation. This pro-crypto majority, paired with a crypto-friendly executive branch, significantly increases the chances of passing key legislation. High-priority actions include the repeal of SAB 121, which would restore banks’ ability to custody crypto, and the passing of stablecoin and market structure bills, which would provide much-needed clarity for the industry.
In addition to legislative momentum, there is a dramatic overhaul of federal agencies. At the SEC, Gary Gensler—long regarded as the crypto industry’s most prominent antagonist—will step down in January, making way for Paul Atkins, a vocal advocate for digital assets. Commissioners Hester Peirce and Mark Uyeda, both strong proponents of pro-crypto policies, will now wield greater influence. With the departure of anti-crypto commissioners Jaime Lizarraga (stepping down for personal reasons) and Caroline Crenshaw (not renominated), the SEC could see all five commissioners aligned with the industry’s interests by 2025. Meanwhile, the Treasury and Commerce Departments are also seeing pro-crypto leadership, with Scott Bessent and Howard Lutnick stepping into key roles. Adding to this transformation, Trump appointed David Sacks, a seasoned crypto investor, as “AI and Crypto Czar.” This newly created role is designed to harmonize regulatory efforts across federal agencies, Congress, and the administration, underscoring the administration’s commitment to integrating crypto into the broader economy.
Bitcoin’s ascent—from obscurity to a $2 trillion market cap—has occurred despite years of governmental indifference and hostility. The crypto industry has never operated within an environment where the U.S. government was actively supportive. For the first time, bitcoin may have the U.S. government as an ally rather than an adversary. Trump’s proposed elimination of capital gains taxes, the creation of a national bitcoin reserve (explored in detail below), and the prospect of a collaborative regulatory framework from Congress represent profoundly bullish catalysts. If the past few years has shown what bitcoin can achieve with non-stop regulatory headwinds, imagine what might happen with the U.S. government actively supporting it.
A Potential Global Bitcoin Arms Race
The reality is that we are already in the early stages of sovereign governments acquiring and holding bitcoin. Currently, governments collectively hold approximately 2.2% of all bitcoin, with the U.S. leading the way at over 200,000 BTC. Other significant holders include China, the United Kingdom, El Salvador, Finland, and Ukraine, while nations like Bhutan and the UAE are actively mining bitcoin. Yet, this is likely just the tip of the iceberg, as credible reports suggest that other governments in regions like the Middle East, Latin America, and Europe may be quietly accumulating bitcoin.
However, Donald Trump’s return to the White House could significantly accelerate this trend. One of his major policy proposals is the establishment of a “Strategic Bitcoin Reserve,” reclassifying the United States’ existing bitcoin holdings as a reserve asset comparable to gold. According to Forbes, Trump has confirmed his intention to create this reserve, which would be a watershed moment in bitcoin’s adoption at the sovereign level.
Wyoming Senator Cynthia Lummis has also introduced a bill that takes this proposal even further. Her plan calls for the United States to purchase up to 1,000,000 BTC over five years, locking it up for a minimum of 20 years. This would effectively remove 5% of bitcoin’s total supply from circulation, ensuring its strategic use for future debt management. With bipartisan support and early discussions with the incoming Treasury Secretary, the concept of a national bitcoin reserve is gaining traction.
Even if Lummis’s bill fails to pass, Trump could sidestep Congress by leveraging the Exchange Stabilization Fund (ESF). Created under the Gold Reserve Act of 1934, the ESF grants the Treasury authority to stabilize the dollar by engaging in currency transactions. Historically, the ESF has been employed for various purposes: after World War II, it was used to purchase gold; during the 2008 financial crisis, it temporarily guaranteed deposits in certain money market mutual funds; and in 2020, it supported loans, loan guarantees, and investments for businesses impacted by COVID-19. In theory, Trump could use this fund to start acquiring bitcoin unilaterally, providing a rapid and game-changing entry into bitcoin markets without requiring legislative approval.
The mere possibility of the world’s largest economy acquiring bitcoin at this scale is already prompting reactions from other nations. For years, bitcoin advocates have theorized that governments would eventually turn to bitcoin as a hedge against currency debasement, runaway debt, and geopolitical instability. This scenario creates a game-theory dynamic, where nations must acquire bitcoin to avoid being left behind in a global transition to decentralized, finite currency.
El Salvador, the first country to adopt bitcoin as legal tender, has been at the forefront of this shift since 2021. Its daily bitcoin purchases under the “Bitcoin Law” have contributed to significant economic growth, with the nation now holding close to 6,000 BTC. Similarly, Russia is exploring the creation of a strategic bitcoin reserve as part of its efforts to reduce reliance on traditional currencies, with proposals from lawmakers under review. Similarly, Brazil has introduced a national bitcoin reserve bill, which calls for the country’s central bank to gradually acquire bitcoin until it comprises 5% of the nation’s total reserves.
Japan, too, is considering entering the fray. Lawmakers like Satoshi Hamada have submitted proposals to the National Diet advocating for a national bitcoin reserve. While Hamada’s political party holds limited influence, the idea is gaining traction, supported by prominent voices like Yuichiro Tamaki, who champion pro-crypto reforms. Polish presidential candidate Slawomir Mentzen vowed to create a bitcoin reserve if elected in 2025 and members of the Dutch government are proposing to establish a national bitcoin reserve by selling a portion of their current gold reserves.
Meanwhile in Germany, former German Finance Minister Christian Lindner publicly criticized Chancellor Olaf Scholz for liquidating the country’s bitcoin holdings earlier this year at $50k, a decision that has already proven to be a $2.7 billion blunder. And in the EU, European MP Sarah Knafo gave a speech to the European Parliament stating that “the EU is squandering our money” and implored them to set up a strategic bitcoin reserve.
In addition to these nations, bitcoin reserve discussions have emerged in China, Canada, South Korea, Turkey, Saudi Arabia, Argentina, Switzerland, Singapore, Nigeria, Venezuela, Kazakhstan, Ukraine, Panama, Zimbabwe, and Cuba. Rising concerns about sanctions (exemplified by Russian asset freezes) and the desire of BRICS nations to bypass the U.S. dollar further fuel this trend. While bitcoin’s integration into national reserves was inevitable given the forces already at play, the U.S.’s potential move has massively accelerated this trend.
The strategic acquisition of bitcoin by multiple governments has profound implications for its price. Should the U.S. government classify its current holdings as a strategic reserve, let along proceed with purchasing 1,000,000 BTC over five years, the cascading effect of other nations joining the race to secure bitcoin will amplify demand exponentially. The resulting supply shock could drive bitcoin prices to unprecedented levels, as institutional investors and private holders also vie for the shrinking pool of available bitcoin. This urgency to acquire bitcoin, coupled with its programmatic scarcity, is likely to set off a global arms race for digital gold, pushing its price much higher than most people anticipate.
A Multitude of Macro Tailwinds
In 2025, a confluence of macroeconomic factors appears poised to create tailwinds for bitcoin, potentially driving its price higher. These factors include falling interest rates, mounting U.S. debt, and increasing global liquidity. Each of these influences reinforces bitcoin’s appeal as a scarce, decentralized, and inflation-resistant asset in an environment of expanding monetary and fiscal pressures.
In late 2024, the Fed cut interest rates three consecutive times, marking the first interest rate reductions since the emergency cuts of March 2020. Economists project that the Fed will continue reducing rates in 2025. Lower interest rates diminish the returns on traditional assets like bonds and other fixed-income instruments, encouraging investors to seek higher yields in alternative asset classes. Bitcoin is likely to benefit from this capital reallocation.
Lower rates also make borrowing more affordable, spurring increased demand for credit from both consumers and businesses. This, in turn, can lead to an expansion of the money supply, as evidenced by the sharp rise in M2 during previous periods of low rates. Historically, bitcoin has significantly outperformed other asset classes during periods of rapid monetary expansion due to its fixed supply of 21 million coins and its “hard money” characteristics.
The U.S. debt spiral presents another major macroeconomic tailwind for bitcoin. Despite changes in political leadership, the country’s fiscal trajectory remains unsustainable. As of writing this, the national debt now exceeds $36 trillion, growing by approximately $1 trillion every 100 days. This unsustainable borrowing is driven by mandatory spending obligations like Social Security, Medicare, and Medicaid, combined with rapidly rising interest payments on the debt. According to the Congressional Budget Office, the cost of these mandatory expenses alone now exceeds annual tax revenues, leaving discretionary spending entirely unfunded. This means the U.S. government is running a deficit even before accounting for expenditures like defense or infrastructure. To sustain these obligations, the government has little choice but to print more money, further devaluing the dollar. Bitcoin’s finite supply makes it immune to the dilutionary effects of excessive money printing, and its decentralized nature has led to it increasingly being accepted as a hedge against this type of monetary debasement.
The impact of global monetary expansion on bitcoin further strengthens its case. In 2024, global M2 money supply rose for most of the year as countries like China implemented aggressive stimulus packages and central banks worldwide loosened monetary policy to combat slowing growth. This trend is likely to continue in 2025, as major economies grapple with stagnating growth and deflationary risks. Bitcoin has consistently outperformed other assets during periods of global monetary expansion, largely due to its inherent scarcity and resistance to manipulation.
Falling interest rates, an escalating U.S. debt crisis, and rising global liquidity are likely to create a favorable macroeconomic environment for bitcoin in 2025. While traditional monetary systems face increasing strain, bitcoin’s unique characteristics—scarcity, decentralization, and resistance to debasement—position it as an attractive alternative for investors seeking to preserve value. The convergence of these factors suggests that bitcoin could thrive in the coming year, further solidifying its reputation as the ultimate hedge against fiat currency debasement.
Favorable Supply and Demand Dynamics
We often discuss bitcoin’s supply and demand dynamics in this newsletter because they remain one of the most reliable indicators of long-term price direction. As we head into the new year, it’s worth revisiting this critical relationship, starting with the supply side.
For over two years, we’ve highlighted the steady decline in the supply of bitcoin available for trading on open markets. Early this year, we flagged this growing supply squeeze as a key catalyst for 2024. Sure enough, when bitcoin ETFs launched and demand surged, the price spiked to new all-time highs in Q1.
However, bitcoin’s price cooled off mid-year, primarily due to unexpected supply hitting the market. In July, the German government liquidated its entire bitcoin holdings—more than 50,000 BTC, valued at nearly $3 billion—over just a few weeks. Adding to this wave of selling pressure was the $9 billion distribution of bitcoin by Mt. Gox to its creditors, following nearly a decade of bankruptcy proceedings.
These two large-scale liquidations were the primary drivers behind bitcoin’s decline from $70K to as low as $55K in August. It took several months for the market to absorb this sell-off and consolidate. However, as is often the case, long-term holders seized the opportunity to buy the dip. As we noted in our August 27th newsletter, institutional investors—typically more sophisticated and better equipped to handle volatility—not only refrained from panic selling but actively increased their holdings during the price decline in the middle of 2024.
Once this supply overhang was absorbed, the market stabilized, and available supply began to dwindle again. All the market needed was a catalyst, which the U.S. election provided. With the outlook on the regulatory environment shifting following Donald Trump’s election, demand for bitcoin surged in November. Yet, there wasn’t enough supply to meet this renewed demand, causing bitcoin’s price to skyrocket to $100K by December.
As bitcoin approached $100K, we did see some supply come back online, primarily from investors who had bought near the February and March highs, with coins older than this remaining relatively dormant in comparison. This group largely took profits, and their coins were quickly absorbed by longer-term, more value-oriented investors. As a result, bitcoin’s price has consolidated once again around the $100K mark as we close out the year.
This pattern illustrates a broader truth: when supply becomes scarce, it often leads to sharp upward price movements. Afterward, new supply re-enters the market, gets absorbed, and the cycle consolidates in preparation for the next upward leg. Importantly, the large supply events in July—namely the German government’s liquidation and the Mt. Gox distributions—were one-off occurrences. With both of these overhangs now behind us, the long-term trend of declining available supply remains intact.
As of this writing, only 2.2 million bitcoin are held on exchanges out of the 19.8 million in circulation. This represents just 11.3% of the total supply—its lowest level in 6 years. This reduction sets the stage for another potential upward price move in 2025.
Further supporting this trend is the growing dominance of long-term holders. Bitcoin held by long-term investors now stands at over 13 million BTC, or approximately 66% of the circulating supply. This signals a growing perception of bitcoin as a store of value rather than a speculative asset. Reinforcing this dynamic is MicroStrategy’s relentless accumulation, with the company now holding over 2% of the entire bitcoin supply. Given Michael Saylor’s “never sell” philosophy, this supply is effectively locked up indefinitely. If U.S. and other governments begin acquiring bitcoin as a reserve asset, even more supply could be taken off the market for decades.
The bottom line is this: while bitcoin’s total supply is capped, the circulating supply available for trading is shrinking rapidly. This supply squeeze, driven by long-term accumulation and institutional adoption, is likely to intensify in 2025.
But that’s only one half of the equation. Supply can shrink all it wants but if there is no demand, price won’t rise. Fortunately, demand for bitcoin appears to be accelerating from multiple sources.
US and International Retail Demand
Retail interest is intensifying, with indicators such as the Coinbase app skyrocketing to the top 10 in downloads in November, including being the number one financial app. There has also been a massive increase in Google searches for bitcoin and related crypto terms. Notably, the upcoming repayment of creditors impacted by the FTX collapse is expected to inject additional demand. Many recipients of recovered funds are likely to reinvest in bitcoin and other cryptoassets, reinforcing its market momentum.
Globally, bitcoin’s appeal goes beyond speculation—it’s a lifeline in regions plagued by unstable financial systems and authoritarian regimes. With only 13% of the global population benefiting from stable currencies, bitcoin’s accessibility offers a critical solution for financial inclusion, enabling cross-border payments, humanitarian aid, and economic freedom. Adoption in these regions is expanding rapidly, as demonstrated by Chainalysis’s 2024 Global Adoption Report.
Institutional Demand
The launch of bitcoin ETFs in 2024 was groundbreaking, becoming the most successful ETF debut in history and opening the floodgates for institutional adoption. More than half of the top 25 hedge funds now own bitcoin, with legendary investors like Paul Tudor Jones, Stanley Druckenmiller, Ray Dalio, Ken Griffin, and Larry Fink investing in the asset. Pension funds, such as those in in Michigan, Wisconsin, Houston Firefighters Retirement Fund, university endowments such as Stanford, University of Austin, Emory, Harvard, Yale and Brown have also begun allocating to bitcoin, with sovereign wealth funds reportedly following suit.
However, much of traditional finance (TradFi) remains underexposed to bitcoin, primarily due to regulatory concerns. For six consecutive years, surveys from Bitwise have cited “regulatory concerns” as the top reason financial advisors avoided crypto. With ETFs now offering a clear, regulated path and an incoming administration supportive of crypto, this barrier has largely disappeared.
Another obstacle was the delayed rollout of ETFs to major financial platforms. Most Registered Investment Advisors (RIAs), who collectively manage $30 trillion in assets, only recently gained access. Schwab approved bitcoin ETFs in late 2024, but large wirehouses like Morgan Stanley, UBS, and Bank of America have yet to fully integrate these products. This is expected to change in 2025, enabling wealth managers to direct significant capital into bitcoin ETFs. Historically, ETFs see larger inflows in their second year, and with 2024 already setting records, inflows exceeding $50 billion in 2025 are highly likely.
The shift is seismic. Institutional investors now face career risk for not having crypto exposure, a complete reversal from even just a year ago when such allocations were risky to recommend. With trillions of dollars of untapped institutional assets poised to enter the market, expect institutional interest to accelerate in 2025.
Corporate Demand
Corporate adoption is accelerating, with the number of publicly listed companies holding bitcoin climbing from 38 to 91 in a year. MicroStrategy’s bitcoin-focused treasury strategy has outperformed all major stocks, including NVIDIA, driving its stock price up nearly 600% year-to-date. Changes in accounting rules by the Financial Accounting Standards Board (FASB) are reducing adoption hurdles, prompting more companies to explore bitcoin as a reserve asset. Proposals at Microsoft and Amazon to include bitcoin in their treasuries signal that even the largest corporations are beginning to consider this strategy. With S&P 500 companies sitting on $2 trillion in cash, even small allocations to bitcoin could create significant demand in 2025. Expect the number of corporations holding bitcoin to increase again in 2025.
Government Demand
We highlighted the implications of the strategic bitcoin reserve and the number of countries considering it previously in this newsletter. However, it’s worth noting that it’s already happening at a state level. In Pennsylvania, the state General Assembly recently introduced a Bitcoin Strategic Reserve Act that would allow the State Treasurer to invest up to 10% of its roughly $7 billion state funds into bitcoin. Both Texas, the 8th largest economy in the world, and Ohio filed their own bills to officially establish a state Strategic Bitcoin Reserve. There are reports Florida could also launch a state bitcoin reserve in 2025 and in Alabama, the state auditor is calling for a state bitcoin reserve. This growing interest could unleash a geopolitical game theory that accelerates adoption among state and federal governments around the world.
With retail, institutional, corporate, and governmental adoption all converging at the same time supply is constrained, 2025 has the potential to be another explosive year for bitcoin.
Conclusion
Having invested in crypto for over a decade, I’ve witnessed some of the most defining moments in bitcoin’s history. From its meteoric rise to $1,000 in 2013 to the ICO boom of 2017, and the frenzy of DeFi Summer and NFTs in 2021, I’ve seen cycles of exuberance and consolidation. But as we approach 2025, I can confidently say this is the most bullish setup I’ve encountered in my entire experience.
For the first time, bitcoin is poised to operate in a supportive regulatory environment, removing one of the biggest hurdles to mainstream adoption. Macro tailwinds are aligning in bitcoin’s favor, while its supply continues to shrink and demand accelerates across retail, institutions, corporations, and even governments. If that weren’t compelling enough, the potential for a global arms race among nation-states to accumulate bitcoin adds a profound new layer to the story. I don’t know where bitcoin’s price will peak in 2025, but one thing is clear: the foundation being laid today has the potential to make this one of the most transformative years in bitcoin’s history.
In Other News
Billionaire investor Ray Dalio recommends bitcoin as ‘hard money’ amid national debt increases.
Crypto advocate French Hill will be the next chair of the House Financial Services
MicroStrategy has been included in Nasdaq’s 100 Index and will now have a spot in Invesco’s QQQ Trust.
New regulatory landscape could result in a slew of new ETFs in 2025.
Coinbase released its annual 2025 crypto market outlook.
Attorneys General allege SEC overreach in digital asset regulation.
Disclaimer: This is not investment advice. The content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice. Nothing contained constitutes a solicitation, recommendation, endorsement, or offer to buy or sell any securities or other financial instruments in this or in any other jurisdiction in which such solicitation or offer would be unlawful under the securities laws of such jurisdiction. All Content is information of a general nature and does not address the circumstances of any particular individual or entity. Opinions expressed are solely my own and do not express the views or opinions of Blockforce Capital.
Disclaimer: This is not investment advice. The content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice. Nothing contained constitutes a solicitation, recommendation, endorsement, or offer to buy or sell any securities or other financial instruments in this or in any other jurisdiction in which such solicitation or offer would be unlawful under the securities laws of such jurisdiction. All Content is information of a general nature and does not address the circumstances of any particular individual or entity. Opinions expressed are solely my own and do not express the views or opinions of Blockforce Capital or Onramp Invest.
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