What goes up must come down, and this holds true for Bitcoin as well.
Consider the price fluctuations of the cryptocurrency this year alone. In January, Bitcoin hovered around $42,000. Come March, its price zoomed to $73,000, only to later hit $60,000.
As of mid-day on December 14, the Bitcoin price was $101,739.82
This raises the question: How long will the current rally last?
According to several industry experts YourStory spoke to, the Bitcoin price is expected to increase in the coming year, but it is also expected to undergo some correction during this climb.
While there will be correction from the economic point of view, it may not be a very sharp one, opines Vugar Usi Zade, Chief Operating Officer at Bitget, a Seychelles-based crypto exchange.
“I don’t think we’ll see a 60,000 or 50,000 correction at this point because everyone is too excited. The key definitive factor would be (Donald) Trump and how the US government tries to manoeuvre around the Bitcoin,” says Zade.
Bitget is currently awaiting approval from the Financial Intelligence Unit-India (FIU-IND) to enter the Indian market.
“I’m sure that there will always be a little bit of correction here and there. The hope is that, even with the correction net, next year, we are still high,” remarks Balaji Srihari, Vice President at CoinSwitch, a crypto trading platform.
History in the making
The price of the cryptocurrency, popularly known as digital gold due to its store of value, has been steadily increasing due to large institutional interest in the digital asset class, followed by Trump’s re-election. The former president has taken a pro-crypto stance, signalling hopes of a more friendly regulatory approach to the crypto market.
If Trump changes his stance on the asset, the ecosystem can witness a drastic change. The former president was initially opposed to the asset class before embracing it. In fact, he even set up his own decentralised finance project, World Liberty Financial, in September this year.
If the factors that made the price of Bitcoin go up change, then there will definitely be an adverse impact, says Avinash Shekhar, Co-founder of Pi42, a crypto-INR perpetual futures trading exchange.
“We are in the realm of ‘what ifs’, and I think we don’t have to wait too long. We are maybe another four or five weeks away from him (Trump) actually taking office and announcing his first 100-day plan. This itself would be an indication,” he says.
The promises Trump made to the crypto community include ensuring that the federal government doesn’t sell its Bitcoin holdings and maintains its current levels, unseating the SEC Chairman Gary Gensler who has led a crackdown on cryptocurrency, taking steps to spearhead Bitcoin mining in the US, and lowering interest rates.
On November 22, weeks after Trump’s re-election, Gensler announced that he would step down from his post on January 20. On December 4, Trump nominated Paul Atkins to the position; Atkins is known for his pro-crypto stance.
The global push
Cryptocurrencies are a volatile asset class and have seen bull runs in the past—once in 2017 and another one between 2020 and 2021. While the rallies in 2017 and 2020 can be attributed to investors being introduced to crypto and a largescale token frenzy, the current rise is due to a “mature reasoning,” as described by industry experts.
The 2020-2021 rally attracted institutional interest into the asset class; and three years later, in January 2024, the US Securities and Exchange Commission (SEC) approved the first spot Bitcoin exchange traded funds (ETFs). These are investment funds traded on stock exchanges that directly hold Bitcoin as their underlying assets, allowing investors to gain exposure to the asset class without needing to buy, store, or manage it themselves.
According to Vikram Subburaj, Co-founder and CEO of cryptocurrency exchange Giottus, the ETF approval took the attention away from the regulatory trouble that was brewing for crypto exchanges like Coinbase, Kraken and others at the time.
But, as time went by, and the market began to refocus on the issues in the landscape, the prices of the digital asset class began stabilising. However, the sentiment changed since Trump got re-elected.
“This is the first time the ecosystem is having someone like the president of an important nation supporting Bitcoin or the crypto ecosystem,” says Subburaj.
While the US elections have given a green signal to the global crypto community, China, which banned cryptocurrencies in 2021, presents a whole new story.
Amid a swirl of media reports and market rumours about the country potentially lifting the ban, the country is expected to roll out 2 trillion yuan ($284.43 billion) as part of a fresh fiscal stimulus package.
“China has basically announced a $2 trillion stimulus package to prop up its economy, which effectively means that it is going to print $2 trillion worth of money. And that’s going to be infused into the broader economy,” points out Edul Patel, CEO and Co-founder of crypto-exchange Mudrex.
According to Patel, this money could lead to an increase in crypto investment in Southeast Asia. “Once the stimulus comes in, it means more money is coming to people. Typically, once more money comes in to people, people start putting in more riskier products,” he notes.
One of the main drivers of the heightened interest in cryptocurrency is the fact that unlike in the US, equities markets are not very large and developed in Southeast Asia.
Raj Karkara, Chief Operating Officer at ZebPay, observes that 2024 was a remarkable year overall for crypto, and he expect 2025 to be even better on this front.
“While predicting prices is speculative, we remain optimistic about Bitcoin’s potential for further growth, driven by its rising adoption and increasing global awareness,” he says.
Investors should exercise caution
Amid the investor rush to the exchanges to grab a slice of the Bitcoin, experts caution that any investments should be made after much consideration and research.
“Do not try to time the market. Be in the market, be a patient long-term investor and let the capital work for you for a slightly longer while. Do not do things you don’t fully understand. If you are a trader and you understand leverage, take leverage. But if you are not a trader, do not leverage trade because somebody else is doing it. Do not get FOMO from other people’s returns,” says Mridul Gupta, Founding Partner at CoinDCX.
Srihari of CoinSwitch says users should be careful of the platform they choose to facilitate trading in and be wary of get-rich-quick schemes floated on social media platforms.
Investors should also look for FIU-IND registered entities to facilitate trading in Bitcoin, advise experts.
