Bitcoin crossed the $100,000 mark earlier this week due to a combination of a risk-on environment in equities, an incoming crypto-friendly administration and, surprisingly, Fed Chair Jerome Powell referring to it as digital gold.
Speaking at The New York Times DealBook Summit he said, “It’s just like gold, only it’s virtual… It’s very volatile, it’s not a competitor for the dollar, it’s really a competitor for gold. That’s how I think of it.”
On the heels of all of that, the cryptocurrency rose as high as $103,000 a token before losing the $100,000 level and backtracking to the mid-90s after the close on Thursday.
It is entirely possible that, given the elevated market and investor sentiment, this marks a local top for Bitcoin and that it retraces to a lower level.
After all, Bitcoin’s most reliable performance correlation is with that of high-growth equities, and recent sentiment readings among investors are elevated (Investor Intelligence Bull/Bear ratio at 3.91) at levels that typically warn of a pullback.
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Should that pullback materialize, investors should look for support near Bitcoin’s prior highs in the low 70s.
But, should the bull market continue into the new year, it’s worth considering how high Bitcoin can realistically rise.
Unlike equities, Bitcoin does not have earnings and thus does not offer a compelling case for setting price targets.
You cannot extrapolate forward an earnings growth rate on Bitcoin.
That said, there are numerous models available, with varying degrees of success, that one can use to make projections.
So, let’s take a look at two of those models, and what they say about how high Bitcoin could move in 2025. (Full disclosure, making predictions is notoriously a fool’s errand, but it’s also an interesting mental exercise.)
2 Model-Based Bitcoin Price Predictions
Bitcoin Stock-to-Flow Model
The Stock-to-Flow Model is a Bitcoin pricing model that effectively treats the cryptocurrency as a limited real asset like gold or oil and estimates price based on the number available in the market relative to the number being produced each year.
It was an oft-used (although highly criticized) model for early Bitcoin advocates and, as you can see in the chart below from Bitcoin Magazine Pro, its track record is mixed.
In 2017, when Bitcoin was trading above $19,000, the Stock-to-Flow Model estimated a price of only $3,900.
By that same token, in December 2022, when the model estimated a price of $48,000, Bitcoin itself was trading for only $16,500.
So, while directionally the model has generally been accurate, the actual price varies wildly.
At the end of the first quarter of 2025, Stock-to-Flow estimates that Bitcoin should be worth approximately $360,000 per token.
Bitcoin Rainbow Chart
The other model we’ll look at today is the Bitcoin Rainbow Chart, which builds a range of possible outcomes around a logarithmic growth curve.
The Rainbow Chart has been around since 2014 but, given that it’s based entirely on assumed logarithmic growth, it’s considered something of a “meme” chart.
That said, given how heavily sentiment-driven Bitcoin is, it’s hard to make a case that any pricing model is “better” than any other best-fit (chart matches the data points) model.
At the end of the first quarter of 2025, the Rainbow Chart (middle yellow curve) estimates that Bitcoin could trade between $160,000 and $215,000.
What the price of Bitcoin actually does in early 2025 will be very dependent on whether the current bull market still has room to run.
As I mentioned earlier, some short-term weakness that brings Bitcoin back to earth would be far from unexpected.
But given how volatile the asset is, there’s also plenty of room for it to surprise on the upside.
In that kind of scenario, you want to minimize your capital outlay while also giving yourself plenty of potential upside exposure, and something like an out-of-the-money bull call spread on a Bitcoin ETF could allow you to do that.
As an example, the iShares Bitcoin Trust (IBIT) March 21, 2025, 65/70 bull call spread at a net debit of about $1.15 would be a total loss if Bitcoin is topped out here but would be worth $5 if Bitcoin rose another 23% or so by late March (334% profit).
You can fine-tune the timeframe and strike prices to meet your needs, but one benefit of a spread is that instead of just paying for volatility (like you would with a long call) you’re offsetting it by also selling some volatility (the short leg of the spread).
It’s not for the lunch money (as my colleague Mike Cintolo would say), but the upshot of Bitcoin is that if it has any upside momentum it tends to have a lot of upside momentum.
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