Bitcoin Price Rises. Don't Rule Out a Crypto Pullback in 2025. — Barrons.com
By George GloverBitcoin bulls are banking on further gains after the cryptocurrency climbed over 100% in 2024. Recent history suggests they might be disappointed.The large-cap token was up 1.9% to $96,411 early Thursday, trading at about 12% below its previous record high of just over $108,000. That also drove up shares in MicroStrategy, the business software company that's become a Bitcoin proxy since it started piling into the token in 2020. The stock was up 6% ahead of the opening bell.The launch of several spot exchange-traded funds and the expectation that President-elect Donald Trump will slash digital-asset regulation both helped power Bitcoin to new heights in 2024. It rose about 120%, logging its second straight year of triple-digit returns.The consensus among crypto investors seems to be that those factors will carry on driving up prices in 2025. Alex Thorn, head of research at the crypto trading firm Galaxy Digital, expects the token to top $150,000 within six months and "test or best" the $185,000 level by the end of the year.But investors ought to be cautious — for any other asset, back-to-back years of gains of more than 100% wouldn't feel sustainable. And recent history shows just how dramatic any selloff could be: Bitcoin rose about 700% to over $64,000 between January 2020 and November 2021, then plunged below $17,000 in a brutal selloff sparked by sky-high inflation and rising interest rates.While a crypto-friendly President can't be a bad thing for Bitcoin, macroeconomic factors could test the digital asset market. Inflation is still running above the Federal Reserve's 2% target, and Chair Jerome Powell signaled to the market last month that the central bank might not cut interest rates by much this year.When interest rates are higher, cryptocurrencies have tended to fall because investors have less spare cash to plow into riskier assets. So don't rule out 2025 being a year of disappointment.Write to George Glover at [email protected] content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.