Bitcoin’s Potential Comeback in 2025

According to analysts, Bitcoin investors could see a comeback in the second quarter of 2025 if BTC continues its historical correlations. Despite a rocky start to the year, Wall Street is optimistic about a possible rally following the March pullback.

Current Market Status

Bitcoin (BTC) is down 14% year-to-date and remains around 26% below its all-time high of January. The cryptocurrency market has been volatile, partly due to President Trump’s tariff threats affecting broader financial markets. However, BTC has stabilized around $80,000 this week, sparking debate on whether this is a buying opportunity or a sign of further declines.

Indicators for Recovery

Analysts point to two key indicators that could signal a Bitcoin recovery:
1. Positive correlation with global money supply growth (M2).
2. Inverse correlation with the US dollar index (DXY).

Christopher Harvey, equity analyst at Wells Fargo, noted that Bitcoin has consistently followed the DXY with a lag of about 10 weeks. He indicated that the recent market dip might be a delayed reaction to the strong dollar environment in Q4 2024. With the DXY peaking on January 13 and showing signs of weakness, a more favorable environment for Bitcoin could emerge.

Ed Engel, an analyst at Compass Point, corroborated this view, highlighting that global M2 typically leads BTC prices by about three months. Engel believes that as global liquidity bottoms out in early 2025 and starts to recover, further weakness may precede a significant rally in Q2.

Favorable Political Climate

Despite the challenges faced by the crypto market, the industry is benefitting from a more favorable political environment. The current U.S. Congress is generally supportive of cryptocurrencies, and the Trump administration has pledged to create an industry-friendly regulatory framework. However, clear regulatory guidelines for crypto businesses remain uncertain.

Global Economic Concerns

Ongoing global economic concerns, such as the trade war, continue to impact the market. These worries contribute to a negative investor sentiment, even amid positive inflation data.

Cautious Outlook

Analysts at Wolfe Research express caution regarding any near-term breakout, noting significant breaches of key support levels. They believe this behavior does not indicate a group ready to rally, suggesting instead that the market may enter a period of sustained weakness. A breakout above the $91,000 to $92,000 range could provide short-term relief, as the $90,000 threshold has been a critical support level for Bitcoin in 2025. Nonetheless, Wolfe Research remains skeptical about a sustained recovery and warns that upward movements could face selling pressure.

*This is not investment advice.