The crypto executive order by President Donald Trump and growing institutional adoption via the ETF will likely alter Bitcoin’s four-year market cycle. This coincides with the ongoing momentum for legislation establishing Bitcoin reserves at the state level. These factors will likely trigger demand that will elevate BTC price towards $200,000 this year.
Key Highlights
- Trump’s crypto executive order will likely disrupt the usual four-year cycle in Bitcoin price movement.
- Bitwise forecasts that the growing adoption of Bitcoin will likely push the BTC price above $200,000 in 2025, fueled by ETF flows.
- Historical Bitcoin patterns feature a three-year growth period preceding 1-year pullback.
- Spot Bitcoin’s debut in 2024 inspired institutional investors, elevating the price above $100,000.
- Market maturity could eliminate the severe downturns relative to other cycles.
President Trump has, in swift action, issued a crypto executive order in part to fulfill the promises declared during the Grand Old Party (GOP) campaigns last year. The decisive move marks a turning point for Bitcoin to depart from usual behavior, potentially altering its long-established four-year cycle in price movements.
The crypto-specific order comes as the digital assets market witnesses unprecedented institutional adoption amid momentum for state-level addition of BTC across the US. The development is tied to the approval of spot Bitcoin ETFs by the Security and Exchange Commission (SEC).
Bitwise Predict Bitcoin to Top $200,000
Bitwise head of investment, Matt Hougan, presents a compelling argument indicating why 2025 will ultimately become an outlier period relative to historical patterns. Hougan states in a note issued on Jan 29 that Bitcoin could exceed the $200,000 milestone in 2025. The surge will emerge from ETF flows and heightened institutional participation.
Market analysis has traditionally been a four-year cycle since Bitcoin’s inception. The pattern features a three-year appreciation phase preceding a 12-month correction period, with the downtrend ranging between 58% – 74% plunge. The regularity of the four-year cycle aids the investment planning that dominates the crypto space.
The present cycle traces from the turbulent experiences in mid-2022 when major industry players, among them Celsius, Three Arrows Capital (3AC,) and crypto exchange FTX, plunged into bankruptcy.
A key turning point for the industry began on March 10, 2023, when Grayscale won the case against the SEC to allow the conversion of its Bitcoin trust into a spot Bitcoin ETF. This yielded an opportunity for providers of asset management services, including Bitwise, BlackRock, and Fidelity, among others, to enter the fray.
The unveiling of spot Bitcoin ETFs in Jan 2024 has defied initial projections for the digital asset sector. The approval has become a watershed moment behind the substantial institutional investment that catapulted Bitcoin price from $22,000 to over $100,000 within 12 months.
The recent legal and political developments suggest that long-term growth is inevitable for the risk-on assets. The cryptocurrency sector is not an exemption, with Hougan noting that the ultimate impact of the changes could take a multi-year period to materialize. This will ultimately alter the market cycle timing.
Bitcoin Surge to $700,000 Target
The potential influence of Trump’s order on the market structure sparked debate on whether the traditional corrections would comply with the historical patterns. Hougan is skeptical about whether Bitcoin will experience a 70% pullback in the presence of key financial figures, including BlackRock’s chief Larry Fink, predicting Bitcoin will hit $700,000.
Hougan projection is premised on the awareness that institutional adoption of BTC via ETFs introduces new dynamics absent in previous cycles. A steady flow in the institutional capital will yield more stability to Bitcoin’s price action, potentially eroding the severity of the market downtrend.
While Hougan acknowledges these changes, he considers that the four-year cycle has yet to disappear completely. The heavy utilization of leverage could still rekindle the usual corrections. Nonetheless, unlike past downturns, such may have less severity and become short-lived.
Hougan indicates that the regulatory developments could challenge the market participants. A delay in fully realizing the present regulatory challenges by 2026 would ultimately disrupt the conventional timing of market cycles.
Why This Matter
The market maturation will likely bring new considerations into play. Institutional investors often portray longer investment horizons and deploy different risk management approaches. This will bring unique attributes unlike in previous cycles where the retail traders dominated.
The present market indicators have a strong upward momentum for BTC, with ETF flows surpassing the analysts’ predictions. The institutional demand has brought buying pressure never witnessed in previous cycles.
Corporate and government Bitcoin purchases are a factor that could alter the market dynamics. The presence of large-scale acquisitions brings unique demand independent of the retailers’ sentiment. Trading patterns would change as institutional participation brings sophisticated strategies and risk management to crypto.