How much will Bitcoin rise by 2025? Three basic ideas to prevent further losses

Source: Talking About Li and Outside

Yesterday (December 16), the price of Bitcoin broke through $107,000, once again setting a new historical high. As of the writing of this article, the price of Bitcoin remains around $106,000, as shown in the figure below.

Some analysts believe that the recent breakthrough in Bitcoin's price is largely due to Trump reiterating his plan to establish a U.S. Bitcoin strategic reserve. It is reported that during an interview with CNBC, when asked if he planned to establish a cryptocurrency reserve similar to the oil reserve, he replied, "Yes, I think so."

I tried to find the source of this news and found this report on Forbes dated December 14, as shown in the figure above. However, it seems that mainstream media, social media, and KOLs began to focus on reporting and discussing this matter starting from yesterday when Bitcoin once again set a new historical high.

The market often works this way; when prices rise, various potential positive news and analyses based on this will appear in front of people. For example, some analysts attribute this Bitcoin breakthrough to factors such as the expectation of a Federal Reserve interest rate cut in December.

But in any case, from a long-term perspective, these are all positive for Bitcoin. After more than a decade of development, Bitcoin has finally transformed from a "scam" in the mouths of most people into an asset allocated by more and more large institutions, and it may even become a strategic reserve asset for more countries in the not-too-distant future.

From a price performance perspective, it is not an exaggeration to say that Bitcoin is the most efficient asset in terms of growth over the past 12 years, rising from around $10 in 2012 to the current $106,000, an increase of more than 10,000 times.

Although many people now view Trump's plan to establish a U.S. Bitcoin strategic reserve as a huge conspiracy to reduce debt, which seems to have some basis, I will not comment on this viewpoint, nor will I refute or discuss it. I only know that I am just an ordinary person and cannot change the world’s big picture. I do not know if Bitcoin is a conspiracy of the U.S.; I just know that Bitcoin can make reasonable profits.

On one hand, the quantity of Bitcoin itself is limited (21 million coins, some of which may have already lost their private keys), while on the other hand, the demand for Bitcoin continues to increase, which will lead to a long-term bullish price trend. I remember a few years ago, someone said that Bitcoin might rise to $1 million in the future, and many people scoffed at it. But now, the same statement seems to be gaining more and more believers who think this could happen in the future.

According to a data report released by 10xresearch this month (December): Bitcoin supply is dwindling. As shown in the figure below.

They provided the reason that the Bitcoin balances on exchanges are rapidly decreasing, and on-chain data further shows that long-term holders are still holding their positions and have not released supply to the market. Currently, only Binance, Coinbase, and Bitfinex have sufficient Bitcoin reserves, but considering the purchasing power of funds flowing into Bitcoin ETFs, Bitfinex's reserves can last about a year, while Binance and Coinbase's reserves can continue for 2-3 years.

If Bitcoin is adopted as a national reserve by the U.S. in the future, it is also possible that more countries will follow suit, further increasing the adoption rate of cryptocurrencies. When many grandparents know about Bitcoin, the influx of new liquidity will theoretically be enormous.

As for the short-term attitudes of certain countries towards Bitcoin, we will not discuss that here; we can focus on a global perspective. Some people and money can flow, some people cannot flow but money can, and some people and money cannot flow at all. This depends on individual perceptions and choices; after all, the Earth is round.

Of course, what we discussed above is more of a long-term perspective. Perhaps the question most people are concerned about is: What will be the peak price of Bitcoin in the short term?

I just calculated… uh, I definitely do not know the answer to that question.

But generally speaking, the main risks Bitcoin's price faces next are two: upside risk and liquidity risk. Based on these two angles, we might as well try to make some assumptions or guesses.

Just a few days ago, I saw Raoul Pal (founder and CEO of Global Macro Investor) post a chart on X:

If we look solely at the comparison data between the Global Macro Investor's Total Liquidity Index and Bitcoin RHS (RHS stands for Reproductive Health Science) in the chart above, it seems that Bitcoin has entered the "parabolic phase" of the market cycle, expected to reach a peak of around $110,000 in January 2025, and then drop below $87,000 in February 2025.

However, with the boost from M2 money supply in 2025, for example, assuming there is an expected liquidity growth of $20 trillion next year, with 5% of that liquidity ($1 trillion) attracting the crypto market (including crypto ETFs), then Bitcoin's price may continue to reach a new peak before the low in 2025 (in the third or fourth quarter).

Or we can look back at history; during the bull market in 2021, as Coinbase officially landed on NASDAQ, Bitcoin also reached its then peak of around $64,000. Now, with MSTR included in the NASDAQ 100 index, we wonder if the same story will happen again. The difference is that MicroStrategy's continuous buying seems to have delayed the timing of this script. Just yesterday, MicroStrategy spent $1.5 billion to buy 15,350 Bitcoins at an average price of $100,386. As shown in the figure below.

Of course, to avoid unnecessary trouble, it needs to be reiterated that the above are predictions from certain analysts and do not represent my personal views. Do not take the specific numerical conclusions (guesses) above as investment advice; DYOR.

As we mentioned in previous articles, many people always like to engage in short-term high-frequency trading and hope to beat the market, such as buying at the lowest point and selling at the highest point. However, they often lack basic market judgment and analytical skills, as well as the psychological qualities necessary for trading. Therefore, they tend to place their ideal hopes on others, such as seeking definitive answers from bloggers or group friends, such as how low Bitcoin will drop this week, how high Bitcoin will rise next week, whether to sell Bitcoin after it has risen today, or whether they can still buy Bitcoin now… and so on.

We still have the old saying: your trading should be based on your position management, which mainly includes capital allocation, investment portfolio, goal setting, execution cycle, execution strategy, and risk management. When you have not fully planned your position and have not customized your execution plan, any blind buying or following others' words (such as those of profit-sharing teachers or perpetual profit masters) may be the beginning of your losses.

Just like the guess above, even based on some "so-called certain" answers, different people may have different approaches:

• If Bitcoin really reaches $110,000 in January next year, would you consider selling? How much would you sell? If you choose to sell everything and Bitcoin instead breaks through $150,000, what would you do?

• If Bitcoin really drops below $87,000 in February next year, would you dare to buy? How much would you buy? Would you set a take-profit or stop-loss plan at the same time?

• If you think Bitcoin is still "expensive" and prefer to buy altcoins, can you quickly list three must-have reasons for buying and holding each altcoin within 10 minutes?

• How much "zero-out" capital have you planned in your position? How much Alpha capital have you planned? How much Beta capital have you planned? How much time and energy do you spend daily on market monitoring, news filtering, and project research?

In short, position management determines your profit scale, profit scale determines your investment psychology, and investment psychology can in turn affect your position management.

Some people make money relying on strong backgrounds and connections, some rely on first-hand information filtering abilities or sources, some rely on personal patience and a mature strategy that suits them, some rely on advanced tools or unique methods, and some make money by throwing dice and gambling, while others make money through differentiated approaches (such as selling water and food to gold miners or directly selling various grades of gold to those who cannot mine gold)…

A field filled with more opportunities and dreams of wealth also means higher risks. Take the crypto market as an example; it contains not only ordinary people but also highly professional individuals (including institutions, market makers, etc.), and the money we earn often comes from the losses of others. Therefore, consider: where is our comparative advantage over others, and what gives us the right to win in a game of strategy?

Trading relies not only on so-called techniques but also requires certain psychological preparation. If you are currently losing money, we suggest you consider the following three basic ideas:

First, stop.

Once you find yourself in a predicament or feel lost in the market, it is best to stop and keep calm, seriously review and reflect on your past trades. Then ask yourself: Did those past trades follow your plan, or did you have no plan at all and were just blindly following others' words?

Second, hold on.

Here, holding on mainly includes several aspects, namely adhering to the most basic trading principles and sticking to your trading strategy (or trading discipline).

I wonder how many people remember the basic trading principles we mentioned multiple times in previous articles: preserve your capital, and do not touch what you do not understand.

In any financial field (including the crypto market), preserving your capital should always be the top priority, followed by considering how to make money. If you hope to engage in short-term trading, such as over a 3-6 month period, you should set corresponding take-profit or stop-loss levels based on your risk preference. At the same time, do not hold too many positions (according to our previous article's suggestion, aside from BTC and ETH, holding a maximum of 5 other coins is sufficient), and different positions should be allocated different proportions of capital.

Of course, the definition of trading cycles may vary from person to person. If you consider trades lasting a few hours to a few days as short-term, a few days to a few weeks as medium-term, and a few weeks to a few months as long-term, then operate according to your own definitions; this is subjective.

Similarly, if your trading strategy is a well-thought-out plan, then you should try to overcome your fear of the market and strive to stick to it, strictly following your trading discipline, such as your entry and exit criteria, risk-reward ratio targets, etc. Although sometimes our trading strategies may not be perfect, no strategy can be said to be perfectly accurate. If you make money based on your strategy, then you can reasonably take profits, and if you lose money, you can take the opportunity to optimize your strategy.

As you gradually maintain a certain balance based on your strategy, your position and psychology will also be in a continuous improvement process, and you will find your own long-term winning secret. I remember in an article two weeks ago, I mentioned that I sold some positions when Bitcoin was at $100,000. Later, a few people left sarcastic comments saying: Bitcoin will at least reach $200,000 this round; you sold too early and still write articles to boast… To such comments, I just want to say: You Can You up, No Can No BB.

Lastly, reduce leverage.

A friend told me that he sold his house in March this year and borrowed a lot of money to enter the market, then went all in on Ethereum, only to watch ETH drop while BTC continued to set new highs, so he often got anxious and would message me asking when ETH could take off!

Many people enter the market with the goal of getting rich quickly, but they end up engaging in various revenge trading, trying to achieve rapid wealth accumulation by chasing the trends they see, only to find that excessive leverage cannot withstand even slight market fluctuations, leading to losses or liquidation. This is secondary; they might even collapse psychologically.

Even worse, when they incur losses or see others posting their profits, they hope to take shortcuts by relying on others, blindly following recommendations to lesser-known exchanges, or even directly handing over their funds (exchange accounts, wallet mnemonics) to others for trading, resulting in the loss of their entire principal, and they can only blame their bad luck, sometimes even ending up with various online debts.

Let me share a little story. I remember a friend wanted me to trade on his behalf, meaning he wanted to give me all his money, having invested hundreds of thousands of his own savings plus borrowed hundreds of thousands, and then I could buy whatever coins I wanted with his money. If I made money, he would give me a certain percentage of the profits! To put it nicely, this was his trust in me; to put it bluntly, this was leading me down a path of crime.

Firstly, collecting others' funds for financial activities without any compliance procedures constitutes illegal fundraising. The "Regulations on Preventing and Dealing with Illegal Fundraising" of the People's Republic of China clearly states that without the approval of the State Council's financial management department, any behavior of absorbing funds from unspecified objects by promising to repay principal and interest or providing other investment returns is considered illegal fundraising. Those involving large amounts may face imprisonment of three to seven years and fines. Secondly, risking three to seven years of imprisonment to do such things is completely not worth it for me, especially since I am currently in the country. Thirdly, while making money is one thing, I could also lose money; if I lost everything and you cursed and chose to jump into the river, that would be a bigger issue. I can consider charging others $55 for group fees, as this can be seen as a form of knowledge payment and can provide good communication opportunities for those in need, but casually raising hundreds of thousands to participate in financial trading activities is something I will definitely not do!

In summary, for most people, there are some things that can be done, and some things that are best avoided. Not all money can be earned. Trading itself can sometimes be a complex matter, and many issues may arise during the process. The goal cannot be achieved in a day; discovering problems, thinking about problems, understanding problems, and solving problems will be a continuous process. The market changes in real-time 24/7; we cannot always think about beating the market. It might be better to expand our perspective in terms of space and time when viewing problems.