Institutional and state adoption will drive strong market movements.
Bitcoin will have high correlation with stocks of US companies, says Grummes.
According to new projections, a lot of price volatility is coming for bitcoin (BTC) this year, which will be marked by sharp rises and falls. This is highlighted in a new report by analyst Florian Grummes published on January 8.
“The price of bitcoin is expected to range between $70,000 and $150,000 (USD) in 2025, and extreme volatility is expected,” alert. The specialist attributes this possibility to multiple causes.
“Current market dynamics suggest a perfect storm of factors, including inflows into ETFs, potential US strategic reserve considerations, and nasty waves of profit-taking in the stock market,” Grummes details.
The specialist clarifies that this set of factors could propel bitcoin to new heights while exposing it to major turbulence risky. “Any turmoil in the US stock markets will put bitcoin prices at very high risk,” he adds.
“After all, thanks to Wall Street and the numerous bitcoin ETFs, the price of bitcoin is more closely correlated than ever with the fate of the stock markets,” he mentions.
This scenario can be seen reflected in the recent price action. The currency was quoted at USD 108,000 three weeks ago, a new all-time high, and currently oscillates around USD 93,000, that is, USD 15,000 less.
However, it is worth distinguishing that This 13% retracement is typical of bitcoin bullish trends. It has even recorded deeper falls during this cycle. Therefore, traders should know that this type of phenomenon does not necessarily mean the end of the bull run.
Bitcoin is gaining political relevance
“Given the unprecedented presence and political relevance of bitcoin, a complex game theoretical landscape is being created that forces influential players to take the crypto asset seriously,” warns Grummes.
Among the aspects that drive this, First of all, the “institutional domino effect” stands out.. “As major institutions invest in bitcoin, a cascading effect is created in which others feel compelled to follow suit to avoid being left behind,” he explains.
In turn, “the new US administration’s support for the market gives bitcoin additional legitimacy and credibility, making it riskier for governments and companies to ignore or discard the technology,” he adds.
US President-elect Donald Trump has said during his campaign that he will integrate bitcoin into national reserves and make the country the capital of the cryptocurrency industry. For this reason, the markets are focused on the movements he makes in this regard, after his inauguration scheduled for January 20.
Former German Finance Minister Christian Lindner has also spoken out in favor of a BTC reserve for the European Central Bank (ECB). With this, “it places itself in the growing circle of political actors who are opportunistically joining the herd instinct of bitcoin,” says Grummes.
“As the bitcoin user base grows, its usefulness and value proposition become stronger, further encouraging adoption,” says the specialist. And this has a direct impact on its price, which is valued in the face of incoming demand and its limited supply.
However, Grummes warns that the explosive rise of bitcoin since Trump’s victory in the elections in November has left something to take into account. Note that it rose very quickly to more than USD 100,000, breaking the resistance of USD 73,000 that he kept for months. Therefore, it does not rule out a deeper fall as a test of support.
What prices could bitcoin go to?
As the following graph shows, There has been a gap in the bitcoin futures market on the CME exchange between USD 77,930 and USD 80,670. “It would not be surprising if this price gap still needs to be closed,” says the specialist.
A gap in the futures market refers to an empty space in the price chart that occurs when the price opens higher than where it closed. This is common in periods where, due to the strength of supply or demand, volatility grows very quickly.
“This could test the successful breakdown of the cup-and-handle formation,” Grummes envisions. This structure refers to a price movement that looks like the letter “U” followed by a smaller letter.
As the next chart shows, this price movement, which looks like a cup with a handle, has been formed since the end of 2021. Grummes maintains that a test of the breakout of this figure could lead to the continuation of the bitcoin rally.
He highlights that “the next objective of this formation is USD 130,000, which is still pending and could happen throughout 2025.” This figure coincides with projections given by other specialists, such as the research firm Glassnode, while others point to USD 150,000 or more than USD 200,000, as reported by CriptoNoticias.
Beyond the downside risks, Grummes clarifies that “the general upward trend is clearly established and is not at risk.” Currently, enthusiasm abounds in the market, he clarifies. However, in his opinion, Recent weakness, combined with rollercoaster ride of stock markets, invites caution.