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Bitcoin hit a new all-time high in January 2025, experiencing a maximum drawdown of $36,000. Remarkably, it took just three months for Bitcoin to recover. During this period, it showed more resilience than equities did. In contrast, altcoins have yet to make significant gains.
As discussed in a previous report, Bitcoin remains unchallenged in this market cycle. The main factor driving this trend is clear: institutional investors are increasingly investing in cryptocurrency, and Bitcoin is the primary beneficiary of this shift.
Bitcoin production is approximately 400 units daily, totaling around 36,000 units quarterly. In Q1 2025, Strategy alone acquired 81,875 units.
Since November 2024, the AUM of Spot Bitcoin ETFs has increased from $56 billion to $134 billion, equivalent to 780,000 units of additional spot Bitcoin purchase, assuming $100,000 per unit, suggesting 300,000 units per quarter.
Despite recent 13F disclosures that present a mixed picture: whereas the State of Wisconsin Investment Board (SWIB) sold its 3,400 BTC-equivalent holdings in BlackRock’s iShares Bitcoin Trust ETF (NASDAQ: IBIT), the Mubadala Investment Company of Abu Dhabi increased its holdings in IBIT from 4,700 to 5,000 BTC-equivalent.
Net purchase of Bitcoin by Strategy per quarter | +80,000 |
Net purchase of Bitcoin bySpot Bitcoin ETFs per quarter | +300,000 |
Net production of Bitcoin per quarter | −36,000 |
Source: Compiled by Bybit
Combining the additions from Spot Bitcoin ETFs and Strategy, we can clearly see that new production of Bitcoin can’t keep up with the demand, so that established Bitcoin holders have to give up their existing positions to new investors. What’s more, we haven’t yet counted the purchase of Bitcoin by Metaplanet or Semler Scientific, and more companies are expected to follow suit.
Nonetheless, we’ve seen most Bitcoin HODLers continue to hold, meaning existing investors tend not to sell their Bitcoin holdings — which puts pressure (known as a liquidity squeeze) on the liquidity supply of Bitcoin.
Although Bitcoin’s scarcity has propelled it toward a new high, macro factors still matter. Despite its status as digital gold, in our view, Bitcoin remains a risky asset because it doesn’t generate cash flows as other equities do.
The US and China formally announced a 90-day reduction in tariff rates, with levies on Chinese goods falling to 30%. Negotiating a trade deal with China (arguably the most challenging negotiation on the US’s docket) resulted in a sustained period of renewed optimism that both Wall Street and crypto markets could benefit from. During that period, we saw a material shift in sentiment in Bitcoin’s derivatives market.
Let’s look at some market predictions.
A Standard Chartered analyst predicts that the price of each Bitcoin unit will reach $120,000 by 2025. Several other analysts predict $200,000-per-unit BTC within 2025.
Bybit predicts a medium target of around $150,000, referencing the drawdown from the 2024 cycle.
For a long-term investor, it’s more fundamental to focus on the five-year target.
ARK predicts a target of $300,000 by 2025. That said, it’s beneficial to take note of gold’s $22.5 trillion market cap. If Bitcoin had the same market capitalization as gold, it would be worth approximately $1 million per unit. In five years, even if it only matches half of gold’s market cap, Bitcoin’s target price will be $500,000.