Bitcoin’s price could drop by nearly 26% in the first quarter of 2025, potentially falling to around $75,000, according to a recent market analysis. However, other crypto analysts remain skeptical about the likelihood of such a decline.
In a Jan. 28 market report, Dr. Sean Dawson, head of research at Derive, stated that the probability of Bitcoin (BTC) dropping below $75,000 by March has increased to 9.2%, up from 7.2% over the past 24 hours.
Bitcoin’s Volatility and Market Trends
Bitcoin’s price fluctuations have been closely tied to broader market trends. On Jan. 27, BTC fell by 6.5% to $97,906 amid a widespread downturn in the crypto and stock markets. The decline was triggered by the release of DeepSeek’s latest artificial intelligence model, which rattled investor sentiment. However, Bitcoin quickly rebounded above the $100,000 mark, trading at $102,100 at the time of publication, according to CoinMarketCap.
Dawson noted that Bitcoin’s at-the-money implied volatility—an indicator of demand for options—spiked from 52% to 76%. This suggests that traders are increasing their positions in put options to hedge against potential downside risks.
“The slight uptick in the probability of Bitcoin heading back toward $75,000 reflects a shift in market sentiment toward bearishness as traders adjust to rising uncertainty,” Dawson explained.
The last time Bitcoin was trading near $75,000 was on Nov. 8, just three days after Donald Trump won the U.S. presidential election. Following this dip, BTC entered a strong rally, crossing the $100,000 threshold for the first time on Dec. 5.
Bitcoin’s Correlation with Macroeconomic Trends
Bitfinex analysts noted in a Jan. 27 report that Bitcoin’s price movements continue to reflect its correlation with broader macroeconomic shifts.
“Bitcoin’s price is less a standalone reflection of its market fundamentals and more tied to broader macroeconomic shifts, particularly in risk sentiment,” the analysts stated.
They further emphasized that Bitcoin is no longer operating as an isolated digital asset but is now more aligned with global risk assets.
“In our view, Bitcoin is no longer just a digital asset playing by its own rules — but is now firmly tethered to the broader risk asset landscape,” they added.
Arthur Hayes, co-founder of BitMEX, echoed similar concerns, predicting that Bitcoin could retreat to the $70,000-$75,000 range. He suggested that such a drop might trigger a “mini financial crisis,” leading to increased liquidity injections from central banks. Hayes believes this would ultimately drive Bitcoin’s price to $250,000 by the end of 2025.
Bitcoin Halving and Its Market Impact
Bitcoin’s price movements in 2024 are closely linked to the highly anticipated Bitcoin halving event scheduled for April 2024. Bitcoin halving occurs approximately every four years, reducing the block rewards for miners by 50%. This mechanism decreases the rate at which new BTC enters circulation, historically leading to significant price increases due to reduced supply.
Past halvings have often preceded bullish price trends. For example, after the 2020 halving, Bitcoin’s price surged from around $8,000 to an all-time high of nearly $69,000 by late 2021. Similarly, after the 2016 halving, BTC rose from approximately $650 to $20,000 by December 2017.
The upcoming 2024 halving is expected to lower Bitcoin’s block reward from 6.25 BTC to 3.125 BTC per block. This supply shock could contribute to long-term price appreciation, though short-term volatility remains a concern.
Market Sentiment and Institutional Adoption
The recent surge in Bitcoin’s price to over $100,000 has been fueled by growing institutional adoption and increasing interest in Bitcoin exchange-traded funds (ETFs). Major financial firms, including BlackRock and Fidelity, have launched Bitcoin ETFs, providing traditional investors with easier access to the cryptocurrency market.
Additionally, growing acceptance of Bitcoin as a store of value amid inflation concerns has reinforced its role as digital gold. Institutional investors and hedge funds are increasingly incorporating Bitcoin into their portfolios as a hedge against economic uncertainty.
Potential Risks for Bitcoin in 2025
Despite the optimism surrounding Bitcoin’s future, certain risks could contribute to short-term price declines:
- Macroeconomic Uncertainty: Bitcoin’s correlation with traditional markets means it remains susceptible to economic downturns, interest rate hikes, and shifts in investor sentiment.
- Regulatory Pressures: Governments worldwide continue to scrutinize cryptocurrency markets, with potential regulations that could impact institutional participation and trading activity.
- Market Corrections: Bitcoin has historically experienced sharp price corrections even during bull runs. A temporary pullback to $75,000 would not be unprecedented.
While some analysts foresee a potential dip in Q1 2025, others remain bullish on Bitcoin’s long-term trajectory. With the upcoming halving, continued institutional adoption, and macroeconomic factors at play, Bitcoin’s price is likely to remain highly dynamic in the coming months.
