Predicting Bitcoin's Position in the Next 12 Months
This year has been monumental for cryptocurrency, particularly for Bitcoin (BTC 1.64%), serving as the industry's flagship.
With less than a month left in 2024, Bitcoin's value has spiked an astounding 140% and surpassed $100,000 per coin. Though Bitcoin has since fluctuated between $100,000 and below, I remain hopeful about its future prospects.
Let's scrutinize a few promising indicators that could strengthen Bitcoin in 2025, and speculate where it may be trading in a year.
Setup at the Securities and Exchange Commission
Gary Gensler, a noteworthy figure in the financial world, has garnered attention as a previous investment banker at Goldman Sachs, where he distinguished himself in fields such as mergers and acquisitions (M&A). However, Gensler ventured into public service in the late '90s, holding positions under Presidents Clinton, Obama, and now Biden. Since 2021, he has served as Chairman of the Securities and Exchange Commission (SEC).
On November 20, the SEC announced that Gensler would be leaving his position at the SEC on January 20. While this might appear as Gensler retiring, take into consideration the timing of his departure - January 20, 2025 is President-elect Trump's inauguration day.
A fresh regulatory climate could emerge
In my estimation, one of the major factors driving Gensler's departure from the SEC is his disparate views on crypto regulation compared to President-elect Trump. Trump appears to embrace a more open-minded stance on crypto regulations, consenting to some suggestions from top executives in the crypto market, including Coinbase. Although the crypto sector expanded some under Gensler – including the introduction of spot Bitcoin ETFs – I expect the incoming administration to hold a more pro-crypto sentiment than the current regulatory landscape.
The initial move to boost crypto regulation begins with the Financial Innovation and Technology for the 21st Century Act (FIT21). This bill was passed by the House of Representatives in May and aims to establish more detailed regulations surrounding cryptocurrencies. One of the main components of the bill is determining the roles of the SEC and Commodity Futures Trading Commission (CFTC) in overseeing digital assets.
President-elect Trump has selected pro-crypto entrepreneur Paul Atkins to succeed Gensler as Chairman of the SEC. Moreover, the Republican Party will retain a majority in both the House of Representatives and the Senate. This political alignment should accelerate Atkins' cabinet approval process while also expediting the signing of FIT21 into law by Trump.
Besides the previously mentioned factors, another significant alteration that could emerge under the new Trump administration is the imposition of tariffs. While it's premature to assess the impact of tariffs on the economy, a realistic possibility exists that the price of goods and services could elevate temporarily. Consequently, consumer purchasing power could diminish, leading to a reduction in economic growth for an interim period.
This situation could directly influence businesses and the stock market. If businesses show indications of decelerating sales or weakening profits, the stock market could begin depreciating. In circumstances of widespread economic uncertainty, investors typically favor alternative assets. Given the escalating adoption of crypto, I would not be surprised to see prominent cryptocurrencies, such as Bitcoin, demonstrate a surge as investors include it as an additional layer of diversification to their portfolios.
Will Bitcoin be higher or lower one year from now?
The following chart illustrates Bitcoin's price throughout 2024. Following a brief surge earlier in the year, Bitcoin's price movements remained relatively unremarkable during the spring and summer. Bitcoin only started to display substantial growth around the time of the election.
I believe the ongoing growth stimulating Bitcoin could indicate enthusiasm regarding how the new administration will positively influence and alter the crypto landscape.
Although I cannot definitively predict whether the price of Bitcoin will ascend or descend, historical data suggests it should gain momentum under the new Trump administration. With new regulations on the horizon and a more pro-crypto administration forthcoming, I remain tentatively optimistic that Bitcoin's price will continue to escalate over the ensuing year.
In light of Gary Gensler's departure from the SEC and President-elect Trump's pro-crypto stance, there might be a shift in crypto regulations. This could potentially attract more investment in the sector, including Bitcoin. (money, finance, investing)
With the passing of the Financial Innovation and Technology for the 21st Century Act and a more favorable regulatory environment under the Trump administration, Bitcoin's future prospects could be promising, possibly leading to an increase in its price. (money, finance, investing)
