2025 BTC Price Prediction: BTC Trend Forecast Based on Technical and Macroeconomic Data

1. Introduction

Entering 2025, Bitcoin's leading position in the cryptocurrency market remains solid. As of early May, the price of Bitcoin is around $95,000 to $100,000, having briefly approached the $100,000 mark before pulling back. This surge began with the halving event in April 2024, but the market performance is far below previous cycles: the increase within a year post-halving is only about 46%, setting a historical low for the same period, with the price just around 10% lower than its historical peak. This situation reflects the dual impact of market maturity and macroeconomic environment—factors such as liquidity expectations and macro uncertainty are widely believed to suppress expectations of explosive growth. In this market context, investors are concerned not only with the price itself but also with various factors driving price changes: technical indicator signals, on-chain activity, supply and demand structure, as well as macroeconomic and geopolitical events.

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2. Overview of Bitcoin

2.1 The Development History of Bitcoin

The origin of Bitcoin can be traced back to 2008, when Satoshi Nakamoto published the paper "Bitcoin: A Peer-to-Peer Electronic Cash System," which introduced the concept and theoretical framework of Bitcoin. The true identity of Satoshi Nakamoto remains a mystery, adding a layer of intrigue to Bitcoin. In the paper, Nakamoto elaborated on how Bitcoin utilizes peer-to-peer networks and proof-of-work mechanisms to achieve a decentralized electronic cash system, addressing the trust and double-spending issues present in traditional electronic payment systems.

On January 3, 2009, Satoshi Nakamoto mined the first block of Bitcoin, known as the "genesis block," on a small server located in Helsinki, Finland, and received a reward of 50 BTC, marking the official launch of the Bitcoin network. In the genesis block, Satoshi Nakamoto wrote a sentence: "The Times 03/Jan/2009 Chancellor on brink of second bailout for banks," which not only proves the time of the block's creation but also hints at the background of Bitcoin's birth — distrust of the traditional financial system and the exploration of decentralized currency.

In the first few years after the birth of Bitcoin, its development was relatively slow, mainly spreading among niche groups such as tech geeks and cypherpunks. On May 22, 2010, the famous "Bitcoin Pizza Day" event occurred in Bitcoin history, where Bitcoin enthusiast Laszlo Hanyecz purchased two pizzas worth $41 for 10,000 BTC. This marked the first real-world value exchange for Bitcoin and signified the gradual entry of Bitcoin into the public eye.

As Bitcoin's popularity gradually increased, on July 17, 2010, the world's largest Bitcoin trading website Mt.Gox was established, providing a relatively convenient platform for Bitcoin trading. Since then, Bitcoin trading gradually became active, and the price began to fluctuate. In the first half of 2011, the price of Bitcoin started to rise rapidly, going from a few cents initially to over 30 dollars, and then reached a historical high of 230 dollars in November, but soon experienced a significant correction, with the price dropping to around 2 dollars. This price fluctuation attracted more attention and made people realize the high risks and volatility of the Bitcoin market.

In November 2012, Bitcoin experienced its first halving event, reducing the block reward from 50 BTC to 25 BTC. The halving mechanism is one of the important designs of Bitcoin, with the block reward halving approximately every 4 years (or every 210,000 blocks). This gradually reduces the supply of Bitcoin, similar to the scarcity of gold, which supports the value of Bitcoin to a certain extent. After that, the price of Bitcoin gradually stabilized and welcomed a new round of rising trends in 2013.

In early 2013, the price of Bitcoin surged again, reaching a historic high of $1242 in December. This round of increase was mainly driven by several factors, including investor distrust in traditional currencies triggered by the Cyprus banking crisis, the increasing global awareness of Bitcoin, and the gradually more open attitudes towards Bitcoin in some countries and regions. However, the Bitcoin price bubble subsequently burst, and for most of 2014, the price of Bitcoin remained at a lower level. The collapse of the Mt.Gox exchange further exacerbated market panic, causing the price of Bitcoin to drop below $300 at one point.

From 2015 to 2016, the Bitcoin market was in a bear market and a period of sluggishness, with prices continuing to decline. In July 2016, Bitcoin experienced its second halving event, reducing the block reward to 12.5 BTC. This halving did not immediately lead to a significant price increase, but laid the foundation for the subsequent bull market.

In 2017 - 2018, Bitcoin experienced its third bullish market, with prices rising rapidly once again. In the first half of 2017, the price of Bitcoin started to rise from around $1000, reaching nearly $20000 by the end of the year, a historical high. The main driving factors of this bullish market included the entry of institutional investors, the launch of Bitcoin futures, and a surge of investment enthusiasm for cryptocurrencies globally. However, at the beginning of 2018, the Bitcoin price bubble burst again, leading to a significant price correction and the onset of a bear market.

From 2019 to 2020, the price of Bitcoin remained relatively stable but was also accompanied by significant volatility. In March 2020, due to the outbreak of the COVID-19 pandemic, the global financial markets experienced substantial turmoil, and the price of Bitcoin briefly plummeted below $4000. However, as central banks around the world adopted loose monetary policies, market liquidity increased, and the price of Bitcoin quickly rebounded. In May 2020, Bitcoin experienced its third halving event, reducing the block reward to 6.25 BTC, which further propelled the price of Bitcoin upward.

At the end of 2020 and the beginning of 2021, institutional investors entered the market on a large scale, driving the price of Bitcoin to continue rising. In April 2021, the price of Bitcoin reached a historical peak of around 64,000 USD. However, subsequent tightening of regulatory policies in China, along with strengthened global regulations on cryptocurrencies, led to a significant drop in the price of Bitcoin.

From 2022 to 2023, the price of Bitcoin was significantly affected by factors such as the Federal Reserve's interest rate hikes and the collapse of Terra Luna, dropping below 20,000 USD. In 2023, the price of Bitcoin fluctuated between 20,000 USD and 30,000 USD.

In early 2024, market sentiment gradually warmed up, and prices began to rise slowly. In mid-2024, the spot Bitcoin ETF was approved, which is considered an important milestone in the development of Bitcoin, marking further recognition of Bitcoin in mainstream financial markets, leading to a wave of price increases.

2.2 The Technical Principles of Bitcoin

The core technology of Bitcoin is blockchain, which is a decentralized, distributed ledger technology. The core feature of blockchain is that it links all transaction records in chronological order in the form of blocks, forming a chain, hence the name blockchain. Each block contains a set of transaction data, a timestamp, the hash of the previous block, and a random number (Nonce). The hash is a fixed-length string obtained by performing a hash operation on all the data within the block, which possesses uniqueness and irreversibility; that is, any change in the data within the block will result in a change in its hash. The hash of the previous block tightly connects the current block with the previous block, forming an immutable chain of transaction records.

Decentralization is one of the key features of Bitcoin. In traditional financial systems, transactions need to go through centralized intermediary institutions such as banks and payment organizations, which are responsible for verifying the authenticity of transactions, recording transaction information, and maintaining the consistency of the ledger. However, in the Bitcoin system, there are no central issuing institutions or intermediaries; all transactions are maintained collectively by network nodes. The Bitcoin network consists of numerous nodes around the world, which are connected to each other via the Internet, participating together in the transaction verification and block generation process of Bitcoin. Each node retains a complete copy of the blockchain, and when new transactions occur, the nodes verify the transactions and package the validated transactions into blocks, attempting to add them to the blockchain. This decentralized design gives the Bitcoin system higher security and attack resistance, as there is no single central node that can be attacked or controlled.

Mining is the process of generating new blocks and issuing new Bitcoins in the Bitcoin network, and it is a key mechanism for maintaining the security and stability of the Bitcoin network. Miners compete to obtain the rights to record new blocks by solving complex mathematical problems. When a miner successfully finds a hash value that meets the criteria, they can add the new block to the blockchain and receive a certain amount of Bitcoin as a reward. This process requires a large amount of computing power and electricity consumption, as finding a qualifying hash value is a random process. Miners need to continuously try different random numbers until they find one that can make the block's hash value meet specific conditions.

Bitcoin adopts a Proof-of-Work (PoW) mechanism to select the miner for the next block. Under the PoW mechanism, miners need to prove that they have expended a certain amount of work through calculations in order to gain the right to add transactions and receive rewards. Specifically, miners need to perform hash operations on blocks that contain transaction data, the hash value of the previous block, timestamps, and random numbers, continuously adjusting the random number until the calculated hash value meets certain difficulty requirements. The difficulty requirements are automatically adjusted by the Bitcoin network based on the current computing power situation, with the goal of ensuring that a new block is produced approximately every 10 minutes. When a miner successfully finds a qualifying hash value, he broadcasts this new block to the entire network, and other nodes will add it to their own blockchain copies after verifying the legitimacy of the block, and then start mining on the next block.

The issuance mechanism of Bitcoin is closely related to mining. The total supply of Bitcoin is capped at 21 million coins, which are gradually released through the mining process. Initially, the reward for each new block was 50 BTC, and after every 210,000 blocks (approximately every 4 years), the block reward is halved. For example, from 2009 to 2012, the reward for each new block was 50 BTC; from 2012 to 2016, the reward was halved to 25 BTC; from 2016 to 2020, the reward was further halved to 12.5 BTC; from 2020 to 2024, the reward is 6.25 BTC; in 2024, the fourth halving occurred, and the block reward became 3.125 BTC. Over time, the number of newly issued BTC will decrease, eventually reaching the total supply limit of 21 million coins around the year 2140.

The transaction process of Bitcoin is based on cryptographic principles, using public keys and private keys to ensure the security and privacy of transactions. Each Bitcoin user possesses a pair of public and private keys; the public key is used to generate a Bitcoin address, similar to a bank account number, allowing others to send Bitcoin to the user via this address. The private key, on the other hand, serves as the user's identity credential, used to sign transactions and prove ownership of the Bitcoin at that address. When a user initiates a transaction, they will sign the transaction information with their private key and then broadcast the signed transaction to the Bitcoin network. Other nodes, upon receiving the transaction, will use the sender's public key to verify the authenticity of the signature. If the signature verification passes, and the amount of Bitcoin in the transaction does not exceed the balance at the sender's address, then the transaction is considered valid and is included in a new block. This cryptography-based transaction verification mechanism ensures that only the holder of the private key can access the Bitcoin at the corresponding address, thereby guaranteeing the safety of the funds.

3. Historical Analysis of Bitcoin Price Fluctuations

3.1 A Review of the Historical Trends of Bitcoin Prices

Since its inception in 2009, Bitcoin has experienced dramatic price fluctuations, resembling a legendary financial epic that has captivated global investors. In its early days, Bitcoin was hardly noticed, with negligible value. On May 22, 2010, a landmark event in Bitcoin's history occurred when programmer Laszlo Hanyecz purchased two pizzas for 10,000 Bitcoins, marking the first time Bitcoin realized value exchange in the real world; at that time, the price of Bitcoin was only 0.003 cents, which could be described as 'penniless'.

In 2011, Bitcoin began to emerge, with its price first breaking the $1 mark, subsequently starting a remarkable upward journey, peaking at $30, an increase of 3000 times. This surge delighted early Bitcoin investors, as if they had struck a "gold mine" overnight. However, the good times didn't last long, as Bitcoin's price quickly fell back, dropping to around $2. This significant volatility gave people their first glimpse of the high risk and uncertainty in the Bitcoin market.

In 2013, the price of Bitcoin experienced a more rapid increase, rising from tens of dollars at the beginning of the year to a peak of 1242 dollars, with an increase of more than 20 times. During this period, Bitcoin rapidly emerged in the Chinese market, attracting the attention of a large number of investors. At the same time, the Cyprus banking crisis triggered a crisis of trust in traditional currencies among investors, prompting them to turn their attention to digital currencies such as Bitcoin, further driving up the price of Bitcoin. However, the crazy rise in Bitcoin prices also attracted the attention of regulatory authorities, leading countries like China to strengthen the regulation of digital currencies, resulting in a significant drop in Bitcoin prices in a short period, falling to around 450 dollars.

From 2014 to 2015, the Bitcoin market entered a relatively sluggish period, with prices fluctuating between 200 and 400 dollars, humorously dubbed the "death cross period." During these two years, the value of Bitcoin seemed to sink into silence, and investor enthusiasm waned. However, Bitcoin did not succumb to despair; instead, it silently gathered strength, waiting for the next surge.

From 2016 to 2017, the price of Bitcoin experienced another explosive growth. In 2016, Bitcoin began to emerge from a long period of stagnation, and the price started to gradually rise. By 2017, the price of Bitcoin soared from around $1,000 at the beginning of the year to nearly $20,000 by the end of the year, increasing more than 20 times, setting a historical high. The main driving factors of this bull market included the continuous expansion of Bitcoin's application scenarios, the increasing awareness and acceptance of Bitcoin among investors, and the entry of a large number of institutional investors. However, as Bitcoin's price continued to rise, market bubbles gradually became apparent, and regulatory authorities once again strengthened their oversight of the digital currency market, leading to a significant correction in Bitcoin's price at the end of the year.

From 2018 to 2020, the price of Bitcoin experienced significant fluctuations. In 2018, the price of Bitcoin started to fall sharply from its historical high of $20,000, dropping to below $3,000 at its lowest, a decline of over 85%. During this period, the drop in Bitcoin's price was mainly influenced by tighter regulatory policies, the spread of market panic, and the failures of some cryptocurrency projects. In 2019, the price of Bitcoin gradually rebounded, but in March 2020, due to the outbreak of the COVID-19 pandemic, the global financial markets experienced significant turmoil, and the price of Bitcoin was no exception, briefly falling below $4,000. However, as central banks around the world adopted loose monetary policies and market liquidity increased, the price of Bitcoin rapidly rebounded, breaking through $20,000 again by the end of the year.

In 2021, Bitcoin experienced a record-breaking bull market. The price rose from around $30,000 at the beginning of the year, breaking through $60,000 in April, and reaching an all-time high of $69,000 in November. The main driving factors of this bull market included the continued entry of institutional investors, the launch of Bitcoin futures, and the surge of global investment enthusiasm for cryptocurrencies. However, Bitcoin's price subsequently experienced a significant correction, primarily due to the tightening of regulatory policies in China, the strengthening of cryptocurrency regulation globally, and market concerns about overvaluation.

From 2022 to 2023, the price of Bitcoin was significantly affected by factors such as the Federal Reserve's interest rate hikes and the collapse of Terra Luna, dropping below $20,000. In 2022, after breaking through $42,000 at the beginning of the year, the price of Bitcoin began to decline steadily, plummeting to below $28,000 in May. It started to slowly rebound in July but fell below $20,000 again in September. In 2023, the price of Bitcoin fluctuated between $18,000 and $30,000, with the market overall in a phase of adjustment.

At the beginning of 2024, market sentiment gradually warmed up, and the price of Bitcoin began to rise slowly. In mid-2024, the spot Bitcoin ETF was approved, which is considered an important milestone in the development of Bitcoin, marking further recognition of Bitcoin by the mainstream financial market, leading to a surge in price. By December 2024, the price of Bitcoin had surpassed 100,000 dollars, entering a continuous upward cycle.

3.2 Insights from Historical Price Fluctuations for Future Predictions

1. Trend judgment aspect

The historical price trend of Bitcoin exhibits significant cyclical characteristics, having undergone multiple transitions between bull and bear markets. Through the analysis of historical trends, it can be observed that the Bitcoin price generally shows an upward trend over the long term, but is accompanied by severe fluctuations in the meantime. For instance, during periods such as 2011 - 2013, 2016 - 2017, and 2020 - 2021, Bitcoin prices experienced substantial increases in bull market conditions, followed by a transition into bear market adjustment phases. This cyclical fluctuation characteristic indicates that when predicting the future price trend of Bitcoin, it is essential to pay attention to changes in market cycles, along with factors such as the macroeconomic environment and market sentiment, to determine the current stage of the market and thereby make reasonable predictions about future price trends. Additionally, historical data also shows that the increase in Bitcoin prices is often accompanied by a rise in market attention, expansion of application scenarios, and enhancement of investor confidence. Therefore, when predicting future prices, it is crucial to closely monitor the changes in these factors to better grasp the price trend.

2. Risk Assessment Aspect

The high volatility of Bitcoin prices poses significant risks for investors. Major historical price fluctuation events, such as the Mt.Gox incident and adjustments in China's regulatory policies, have caused substantial losses for investors. These events indicate that the Bitcoin market is influenced by various factors, including technical security, regulatory policies, and market sentiment; any change in one of these factors can trigger significant price fluctuations. Therefore, when investing in Bitcoin, investors need to fully recognize the risks of the market and conduct proper risk assessment and management. On one hand, attention should be paid to the technical developments and security status of the Bitcoin market to guard against technical risks such as hacking; on the other hand, it is essential to closely monitor changes in regulatory policies in different countries and adjust investment strategies in a timely manner to avoid policy risks. Additionally, investors need to remain calm and rational, avoiding blind follow-the-crowd investments during times of high market sentiment and not being swayed by emotions during price fluctuations, thus making reasonable investment decisions. At the same time, building a diversified investment portfolio is also an effective way to reduce risk. Funds should not be concentrated solely on Bitcoin investments; instead, they should be spread across different asset classes to mitigate the impact of price fluctuations of a single asset on the overall investment portfolio.

4. Analysis of Factors Affecting Bitcoin Price

4.1 Market Supply and Demand Relations

4.1.1 The issuance mechanism and supply characteristics of Bitcoin

The issuance mechanism of Bitcoin is based on decentralized blockchain technology, generated through the "mining" process. The total supply of Bitcoin is strictly limited to 21 million coins, and this fixed supply cap is a core characteristic of Bitcoin's supply, giving it a scarcity similar to that of gold, theoretically enabling it to combat inflation.

The issuance speed of Bitcoin is not constant but follows a decreasing pattern. Every 210,000 blocks produced, the mining reward for Bitcoin is halved. Initially, the mining reward for each block was 50 BTC, and by 2024, it has undergone four halvings, with the current mining reward being 3.125 BTC per block. As time goes on, the number of newly generated Bitcoins will decrease, and it is expected that by around 2140, all Bitcoins will have been issued. This decreasing issuance mechanism stabilizes the supply of Bitcoin, reducing the new supply of Bitcoin in the market, which potentially supports the price.

In addition, the supply of Bitcoin is also influenced by the behavior of miners. During the mining process, miners need to consume a large amount of computational resources and electricity costs. When the price of Bitcoin is high, the profit margin for mining increases, attracting more miners to participate in mining, thus increasing the supply of Bitcoin; conversely, when the price of Bitcoin is low, the mining costs are relatively high, and some miners may choose to pause or exit mining, leading to a decrease in the supply of Bitcoin.

4.1.2 Drivers of Market Demand

1. Investor Demand: Bitcoin, as an emerging investment asset, has attracted the attention of a large number of investors. Its high price volatility and potential for high returns make Bitcoin an important component of investors' asset allocation. During times of global economic instability, rising inflation expectations, or escalating geopolitical tensions, Bitcoin is often viewed as a safe-haven asset, leading investors to increase their demand for Bitcoin in search of asset preservation and appreciation. For example, during the initial outbreak of the COVID-19 pandemic in 2020, while the global financial markets were turbulent and Bitcoin's price briefly fell, it quickly rebounded and reached new highs as central banks around the world implemented loose monetary policies and market liquidity increased. This reflects investors' demand for Bitcoin as a safe haven in an uncertain economic environment.
2. Enterprise Acceptance: An increasing number of enterprises are beginning to accept Bitcoin as a payment method, further driving the market demand for Bitcoin. Some well-known companies, such as Tesla and Square, have started to accept Bitcoin payments, which not only enhances the visibility and recognition of Bitcoin but also creates more application scenarios for it. By accepting Bitcoin payments, enterprises can attract more consumers who hold Bitcoin, thus expanding their customer base; on the other hand, it can also reduce the cost and time of cross-border payments, improving transaction efficiency. As enterprise acceptance continues to rise, the practicality and value of Bitcoin will be further enhanced, attracting more investors and users, and increasing market demand.
3. Payment Demand: The decentralized and anonymous characteristics of Bitcoin provide unique advantages in cross-border payments and certain specific scenarios. Traditional cross-border payments typically require processing through banks or third-party payment institutions, which is cumbersome, expensive, and time-consuming. In contrast, Bitcoin payments can facilitate direct peer-to-peer transactions without the involvement of intermediary institutions, resulting in faster transaction speeds, lower fees, and no restrictions based on geography or time. In regions with underdeveloped financial infrastructure, Bitcoin payments offer a more convenient payment method for people. Additionally, the anonymity of Bitcoin meets some users' demands for privacy protection, making it popular in certain specific payment scenarios. The existence of these payment demands has driven the growth of Bitcoin market demand.

4.2 Macroeconomic Factors

4.2.1 The Relationship between the Global Economic Situation and Bitcoin Prices

The changes in the global economic situation have a significant impact on the price of Bitcoin. During periods of strong economic growth and ample market confidence, investors are generally more inclined to invest in risk assets in pursuit of higher returns. Bitcoin, as an asset characterized by high risk and high return, tends to attract investors, leading to increased demand and consequently driving up prices. For example, from 2016 to 2017, the global economy showed signs of recovery, the stock market performed well, and the price of Bitcoin also surged significantly, rising from around $400 at the beginning of 2016 to nearly $20,000 by the end of 2017, an increase of more than 49 times.

However, when the global economy is in recession or facing significant uncertainty, investors' risk appetite tends to decline, leading them to prefer to hold safe-haven assets such as gold and the US dollar. Although Bitcoin is viewed as a safe-haven asset to some extent, due to its relatively small market size and high price volatility, investors may prioritize selling Bitcoin during economic crises to obtain liquidity or move funds to safer assets. For example, during the early stages of the global financial crisis in 2008 and the outbreak of the COVID-19 pandemic in 2020, Bitcoin's price experienced significant declines. During the 2008 financial crisis, Bitcoin's price fell from around $100 at the time to about $30; in the early days of the COVID-19 pandemic in 2020, Bitcoin's price plummeted from around $8,000 to below $4,000 in just a few days, a drop of over 50%. This indicates that Bitcoin's price may be negatively affected in the event of an economic recession or increased uncertainty.

In addition, changes in the global economic situation can also affect investors' expectations and confidence in Bitcoin. If the economic situation improves, investors will be more optimistic about the future development prospects of Bitcoin and willing to pay a higher price for it; conversely, if the economic situation worsens, investors' confidence in Bitcoin may be impacted, leading to a price drop.

4.2.2 The Relationship Between Interest Rates, Inflation Rates, and Bitcoin Prices

1. The impact of interest rates on Bitcoin prices: Interest rates are one of the important tools for macroeconomic regulation and have a wide-ranging impact on financial markets and asset prices. When interest rates rise, the yields on fixed-income assets such as bonds increase, attracting investors to shift their funds from risk assets to the bond market for more stable returns. As a risk asset, Bitcoin's appeal diminishes relatively, and investors may reduce their investments in Bitcoin, leading to a decrease in demand and a drop in price. For example, from 2022 to 2023, the Federal Reserve raised interest rates multiple times to combat inflation, resulting in a significant increase in interest rates. This led to higher yields in the bond market, attracting a large inflow of funds, while the Bitcoin market faced pressure from outflows, causing a sharp decline in price. The price of Bitcoin fell from nearly $70,000 at the end of 2021 to about $16,000 at the end of 2022, a drop of over 77%.
   On the contrary, when interest rates decline, the yields on fixed-income assets such as bonds decrease, prompting investors to seek higher-yield investment opportunities. The appeal of risk assets like Bitcoin increases, leading to a rise in demand and potentially higher prices. For example, after the outbreak of the COVID-19 pandemic in 2020, central banks around the world implemented interest rate cuts, resulting in a significant decrease in rates. This increased market liquidity, and investors began to look for new investment channels, causing Bitcoin's price to rebound rapidly during this period and reach new highs.

2. The impact of inflation rate on Bitcoin price: Inflation refers to the continuous rise in the price level and the decline in the purchasing power of currency. In an inflationary environment, the value of traditional currency is eroded, and investors seek assets that can preserve and increase value. Bitcoin has a limited total supply and possesses certain anti-inflation properties, making it a tool for some investors to cope with inflation. When the inflation rate rises, the demand for Bitcoin among investors may increase, driving up the price. For example, in some countries with severe inflation, such as Venezuela and Zimbabwe, there has been a significant increase in the demand and price of Bitcoin. Residents of these countries purchase Bitcoin to protect their wealth from the devaluation of their national currency.
   However, the impact of inflation on the price of Bitcoin is not absolute. If the inflation rate rises while economic growth slows or enters a recession, investors may focus more on the safety and liquidity of assets rather than their inflation-hedging properties, which could negatively affect the price of Bitcoin. Additionally, the market's perception and acceptance of Bitcoin will also influence the transmission mechanism of inflation rates on Bitcoin prices. If the market's recognition of Bitcoin is low, even if the inflation rate rises, the price of Bitcoin may not show a significant increase.

4.2.3 The Transmission Effect of Fiat Currency Policy on Bitcoin Prices

Taking quantitative easing policy as an example, the monetary policy has a significant transmission effect on the price of Bitcoin. Quantitative easing refers to the central bank purchasing government bonds and other securities to increase the money supply and lower interest rates to stimulate economic growth. Under quantitative easing, market liquidity increases significantly, and the money supply rises, leading to a decline in the marginal utility of money. Investors, in search of assets that preserve value and appreciate, will turn their attention to digital currencies such as Bitcoin.

Quantitative easing policies have led to ample funds in the market, increasing investors' risk appetite, making them more willing to invest in high-risk, high-return assets. Bitcoin, as an emerging investment asset, has a high potential return rate, attracting a large amount of investor attention. Investors are flocking to put funds into the Bitcoin market, driving up Bitcoin prices. For example, after the global financial crisis in 2008, countries like the United States implemented quantitative easing policies, increasing market liquidity, and Bitcoin prices saw a significant rise in the following years. From the end of 2012 to the end of 2013, the price of Bitcoin rose from about $13 to about $1242, an increase of more than 94 times.

Quantitative easing policies can also lead to an increase in inflation expectations. To hedge against the risk of inflation, investors will increase their demand for inflation-resistant assets such as Bitcoin. The total supply of Bitcoin is fixed and is not affected by the increase in currency issuance, which is considered to have a certain degree of anti-inflation ability. When investors expect an increase in the inflation rate, they will buy Bitcoin to preserve value, thereby driving up the price of Bitcoin.

In addition, quantitative easing policies affect the value of fiat currencies, leading to a decline in investor confidence in fiat currencies. Bitcoin, as a decentralized digital currency, is not controlled by governments or central banks, and is viewed by some investors as an alternative or supplement to the fiat currency system. When the credibility of fiat currency is called into question, the appeal of Bitcoin increases, and its price will also be supported.

However, the impact of fiat currency policy on the price of Bitcoin is not one-directional and carries a degree of uncertainty. On one hand, quantitative easing policies may trigger market expectations for economic recovery, leading to a shift in investor preference towards risk assets, thereby affecting the price of Bitcoin; on the other hand, changes in regulatory policies may also disrupt the transmission of quantitative easing policies to the price of Bitcoin. For example, some countries may strengthen regulation of the digital currency market, restricting trading and investment in Bitcoin, which would weaken the driving effect of quantitative easing policies on the price of Bitcoin.

4.3 Regulatory Policy Factors

4.3.1 The Regulatory Attitudes and Policy Measures of Various Countries Towards Bitcoin

Bitcoin, as an emerging digital currency, poses challenges to traditional financial regulation due to its characteristics such as decentralization and anonymity. There are significant differences in the regulatory attitudes and policy measures regarding Bitcoin among various countries.

1. Active support coexisting with regulation: Some countries and regions have a relatively open and proactive attitude towards Bitcoin, acknowledging its legitimacy while strengthening regulation to promote the healthy development of the Bitcoin market. For example, Japan revised the Payment Services Act in 2017, officially recognizing Bitcoin as a legitimate payment method while requiring Bitcoin trading platforms to comply with strict anti-money laundering and KYC (Know Your Customer) regulations to prevent financial risks. The regulatory attitude towards Bitcoin in the United States is more complex, as the regulatory policies of the federal government and state governments vary. Overall, the United States views Bitcoin as a virtual commodity or asset and regulates its trading, investment, and other activities. The U.S. Securities and Exchange Commission (SEC) regulates securities issuance and trading involving Bitcoin, while the Commodity Futures Trading Commission (CFTC) regulates derivative trading such as Bitcoin futures. In addition, the U.S. also requires Bitcoin trading platforms to comply with relevant laws and regulations related to anti-money laundering and anti-terrorism financing.
2. Restrictions on Trading and Investment: Some countries have imposed certain restrictions on Bitcoin trading and investment to mitigate financial risks and protect investors' interests. For example, in September 2017, China issued the "Announcement on Preventing the Risks of Token Issuance and Financing," clearly stating that token issuance financing (ICO) is an illegal public financing behavior that has not been approved, requiring a complete ban on ICO activities and closing all Bitcoin trading platforms within the country. Since then, China has continued to strengthen the regulation of virtual currency-related business activities, strictly prohibiting financial institutions and payment institutions from participating in Bitcoin trading. South Korea has also adopted relatively strict regulatory measures on Bitcoin trading, requiring Bitcoin trading platforms to register under real names, conduct strict identity verification for trading accounts, and restrict minors from participating in Bitcoin trading. Additionally, South Korea has strengthened tax regulation on the digital currency market, imposing capital gains tax on profits from digital currency trading.
3. Complete Ban: A few countries have adopted a complete ban on Bitcoin, considering the significant financial risks and potential illegal uses associated with it. For example, the Reserve Bank of India (the central bank) issued a notification in 2018 prohibiting banks and financial institutions from providing services for transactions involving virtual currencies like Bitcoin, which severely impacted India's Bitcoin trading market. However, in March 2020, the Supreme Court of India overturned this ban, legalizing Bitcoin trading in India again, although it still faces strict regulations. Additionally, some countries, such as Bolivia and Ecuador, have explicitly prohibited the use and trading of Bitcoin, believing that it may pose a threat to their financial stability and monetary policy implementation.

4.3.2 The Direct and Indirect Impact of Regulatory Policy Changes on Bitcoin Prices

1. Direct Impact: Changes in regulatory policies will directly affect the supply and demand relationship of the Bitcoin market, leading to significant short-term fluctuations in Bitcoin prices. When regulatory policies tighten, such as banning Bitcoin trading or restricting the operation of trading platforms, it can lead to an increase in the relative supply of Bitcoin in the market, while demand decreases sharply, causing prices to often drop rapidly. For example, when China comprehensively banned ICOs and Bitcoin trading platform operations in 2017, Bitcoin prices fell sharply in a short period, dropping from around $5000 to below $3000. Similarly, in 2018, when the Reserve Bank of India prohibited banks from engaging in transactions related to virtual currencies, the trading activity in the Indian Bitcoin market significantly declined, and there was also a noticeable drop in Bitcoin prices.
   On the contrary, when regulatory policies become more lenient or clarify the legal status of Bitcoin, it enhances the confidence of market participants, attracts more investors into the market, increases the demand for Bitcoin, and drives up the price. For example, after Japan recognized Bitcoin as a legal payment method, the trading activity of Bitcoin in Japan significantly increased, and the price received certain support.

2. Indirect Impact: Changes in regulatory policies can also have a long-term indirect effect on Bitcoin prices by influencing the expectations and behaviors of market participants. Strict regulatory policies may drive the Bitcoin market to become more standardized and mature, reducing market manipulation and fraud, while improving market transparency and stability. This helps to enhance investor confidence in Bitcoin, attracting more long-term investors into the market, thereby providing positive support for Bitcoin prices. For example, the gradual regulation and standardization of the Bitcoin market in the United States has led to an increasing recognition of Bitcoin among institutional investors, with more and more institutional investors beginning to allocate Bitcoin, driving the long-term rise in Bitcoin prices.
   However, if there is significant uncertainty regarding regulatory policies, market participants may become concerned about the future investment environment, which could lead to a reduction in investments in BTC, resulting in decreased market liquidity and increased price volatility. Furthermore, changes in regulatory policies may also affect the application scenarios and development prospects of BTC. If regulatory policies restrict the use of BTC in certain areas, such as payments and cross-border transfers, this would diminish the practicality and value of BTC, negatively impacting its price.

4.3.3 Bitcoin Price Risk Assessment under Regulatory Policy Uncertainty

The uncertainty of regulatory policies is one of the significant risks facing the price of Bitcoin. Due to the global and innovative nature of the Bitcoin market, there are differences in the formulation and adjustment of regulatory policies among countries, and changes in regulatory policies are often difficult to predict, which brings considerable uncertainty to the Bitcoin market.

In a context of high uncertainty regarding regulatory policies, Bitcoin prices face significant downward risks. On one hand, investors may reduce their investments in Bitcoin due to concerns about sudden tightening of regulatory policies, leading to a decline in market demand and falling prices. For example, when news emerges that a certain country might strengthen its regulation of Bitcoin, Bitcoin prices often experience volatility, and investors tend to adopt a cautious attitude, watching market dynamics. On the other hand, the uncertainty of regulatory policies increases the operational risks for Bitcoin trading platforms and related enterprises, which may lead some platforms or companies to face compliance issues, and even be forced to shut down. This will further impact market liquidity and investor confidence, exacerbating the decline in Bitcoin prices.

Uncertainty in regulatory policies will also affect the long-term development of the Bitcoin market. If regulatory policies cannot be clarified in a timely manner, it will be difficult for the Bitcoin market to form stable development expectations, and innovation and application promotion will also be hindered. This will limit the scale expansion and value enhancement of the Bitcoin market, negatively impacting the long-term trend of Bitcoin prices.

To address the risks brought by the uncertainty of regulatory policies, investors should closely monitor the dynamics of regulatory policies in various countries and timely adjust their investment strategies. On one hand, investors can diversify their investments to reduce dependence on Bitcoin as a single asset, thereby minimizing the impact of regulatory policy changes on their investment portfolios. On the other hand, investors should choose compliant trading platforms and investment channels to ensure the safety of their investments. At the same time, the Bitcoin industry should actively communicate with regulatory agencies to promote the improvement and clarification of regulatory policies, creating a favorable environment for the healthy development of the Bitcoin market.

4.4 Technical Development Factors

4.4.1 The Impact of Advances in Blockchain Technology on Bitcoin

Blockchain technology, as the underlying technology of Bitcoin, has a profound impact on the value and market performance of Bitcoin. The core advantages of blockchain technology lie in its characteristics of decentralization, distributed ledger, immutability, and cryptographic security, which provide a solid technical foundation for Bitcoin.

The performance improvements of blockchain technology directly impact the transaction efficiency and scalability of Bitcoin. Early Bitcoin blockchains faced issues such as slow transaction processing speeds and high fees, which limited their promotion in large-scale commercial applications. With the continuous development of technology, second-layer scaling solutions such as the Lightning Network have emerged, allowing for quick and low-cost Bitcoin transactions by establishing payment channels off-chain. The application of the Lightning Network has significantly increased the transaction speed of Bitcoin, enabling

4.5 On-chain data analysis

Observing on-chain data of Bitcoin can provide insights into the internal demand and supply conditions of the network. The number of active addresses is a commonly used on-chain metric, referring to the number of unique addresses that participate as senders or receivers in transactions within a day. An increase in the number of active addresses indicates more users participating in the Bitcoin network, which is usually seen as a signal of rising demand or increasing adoption. For example, historically, during bull markets, there is often a rapid increase in the number of active addresses, while during sharp price declines, the number of active addresses may also temporarily decrease. Therefore, a continuously rising trend in active addresses often supports price increases, whereas a divergence between activity and price may indicate a change in investor sentiment.

Trading volume is also an important indicator, reflecting the scale of economic activity on the Bitcoin network. On-chain trading volume refers to the total amount (or number) of on-chain transactions within a certain period; typically, an increase in large trading volume indicates active behaviors such as capital inflows or profit-taking. Generally speaking, a price increase accompanied by high trading volume is more convincing; if trading volume continues to decline during price fluctuations, it may lack support. Basic indicators like the number of active addresses and trading volume can help assess bullish or bearish market sentiment: high activity and high trading volume often correspond to signs of a bull market, while declines in both may indicate a cooling market.

The distribution of holding addresses and the structure of holders are also important on-chain data for assessing the market. By analyzing the proportion of Bitcoin held by different addresses, we can understand whether the market is dominated by large holders ("whales") or supported by retail investors. When the proportion of high-net-worth addresses is large and on the rise, it indicates that large holders are accumulating, and Bitcoin supply is concentrated in the hands of a few; this may mean that prices are more sensitive to the sentiments of a small number of large holders, increasing the likelihood of volatility. Conversely, if the proportion of small address holdings is high, it may indicate that more retail investors are participating, and the market is more dispersed. Recent data shows that the number of addresses holding more than 1 BTC in the Bitcoin network has increased, indicating that some funds are flowing toward medium to high holders, which is often interpreted as a signal that large funds are bullish and buying on dips.

More advanced on-chain metrics such as MVRV ratio and Realized Cap can measure the extent of price deviation from the cost basis. The MVRV ratio (Market Value to Realized Value ratio) = Current Market Cap / Realized Market Cap. Realized Market Cap aggregates the price of each Bitcoin based on its last movement (such as transfer or trade). MVRV can be seen as the average unrealized profit multiple of all Bitcoins on the network: when MVRV is significantly above 1, it indicates that the market price is far above the average holding cost, leading most holders to be in profit, which can trigger profit-taking pressure; when MVRV approaches or falls below 1, it indicates that most investors are at break-even or in a loss position, suggesting the market is undervalued and potential support increases. Hence, extremely high MVRV values often appear near peaks, signaling risk; while very low values may indicate a bottom. For example, if MVRV reaches 2.0 (i.e., an average unrealized profit of 100%), it has historically been an important resistance signal.

Realized Cap reflects the "total cost realized", which is particularly significant during the market's stable growth phase. It excludes the impact of long-term dormant Bitcoin, focusing the metric more on the value of assets in real circulation. When a large amount of Bitcoin enters circulation at a high price, the Realized Cap will correspondingly increase; if the market price falls, tokens near the cost price being resold will also affect this metric. By comparing Realized Cap with market capitalization, one can estimate whether the current market is overheated and assess the flow of funds. Overall, on-chain metrics provide underlying data for analyzing investor behavior and market sentiment: activity and trading volume indicate usage heat; token distribution and MVRV reveal value deviation and speculative sentiment. Investors can use this data to judge potential turning points in the market—such as during the bottom stage of a bear market, which is often accompanied by an extreme state of undervaluation on-chain (low MVRV) and a large number of idle chips about to become active.

5. Market Status and Forecast Trends for 2025

Looking at the overall pattern of the Bitcoin market, it is still in the rising phase of a historical bull market cycle at the beginning of 2025, but the shape is different from the earlier periods of extreme volatility. Compared to the multiple increases seen within months after the halving in 2016 and 2020, the growth in this cycle is slowing down. Current prices fluctuate mainly in the range of $50,000 to $100,000, and the participation of institutional investors has made the market structure more stable: spot ETFs and large institutional investors have a greater impact on the market, as they tend to buy during downturns and take profits during rebounds, thereby smoothing price fluctuations to some extent. Data shows that in just one week at the beginning of May 2025, Bitcoin ETFs attracted net inflows of about $425.5 million, indicating that despite retail volatility, institutional funds are still accumulating at lower prices and maintaining an optimistic outlook on the market.

The on-chain metrics of the current Bitcoin network also confirm a gradually stabilizing situation. The number of active addresses continues to rise, indicating an increase in user engagement; at the same time, the concentration of holdings has increased, reflecting the entry of large funds— for example, the number of wallets holding more than 1 BTC saw a 10% increase at the beginning of May. This suggests that some large holders may be waiting for clearer signals of a price increase. On the other hand, the MVRV ratio has not reached extreme highs, and the average unrealized profit across the network is not drastic, which is relatively mild compared to historical peaks. Overall, market sentiment is between cautious and optimistic: despite frequent fluctuations in the short term due to news (such as the pullback caused by concerns over the Federal Reserve's policies in January), long-term investors still have confidence in future growth potential.

From a cyclical perspective, the halving in April 2024 marks the beginning of a new round of inflation reduction, which theoretically should provide a tightening supply effect in the next two years. Currently, the price of Bitcoin has not yet broken through the higher threshold of $110,000, and the market still awaits further developments. Some analysts believe that after stabilizing at $100,000, Bitcoin is expected to resume a sustained upward trend; more optimistic views predict that by the end of 2025, the price may reach the range of $120,000 to $200,000. Regardless, professionals generally emphasize that the market has become more mature, with the likelihood of a "explosive" price increase being lower, but a steady and sustainable upward path may be more in line with the current environment. This indicates that short-term fluctuations or consolidations (such as sideways movements before reaching $100,000) may occur, while long-term prospects remain optimistic. In this process, investors need to be cautious of emotionally driven volatility, control leverage and position risks, and pay attention to the potential impacts of global macroeconomic and regulatory dynamics on the market.

The above chart only demonstrates BTC price prediction and does not constitute investment advice. Cryptocurrency has significant volatility; please invest cautiously!

Conclusion

Bitcoin price prediction is both an art and a science, requiring the integration of various analytical methods. However, no matter how diverse the analytical tools are, the unpredictable risks of the market always exist. The correlation between the Bitcoin market and traditional assets is not constant, and sudden economic, policy, or security events can disrupt technical trends. Therefore, investors should invest rationally: pay attention to position management, avoid blindly chasing highs or selling off in panic, and flexibly adjust strategies. When bullish sentiment is high, one should be cautious of correction risks brought by technical indicator divergences; during excessive market fear, one should also be wary of bottom-fishing traps. In summary, the price trend of Bitcoin is driven by multiple factors, with various analytical methods complementing each other. Understanding and applying these methods comprehensively can help seize opportunities in a highly volatile market, but it is essential to always keep in mind the uncertainty of the market and prepare for risk hedging and stop-loss measures.