Will Bitcoin Overheat in 2025?

Bitcoin At All-Time High

Bitcoin reached an all-time high of $119k last week. At the same time, the long-term holder net position change metric advanced further.

That’s a bullish signal and indicates that long-term holders were not selling; they were accumulating.

Demand for Bitcoin remains significant, and the nature of that demand (see previous post) means that the cycle is much more muted.

There are fewer sharp rallies and sell-offs and, more notably, more extended periods of consolidation.

This is healthy as it allows both momentum and support levels to reset and eliminates overleveraged positions.

That said, it makes the interpretation of signals more challenging as the properties more often associated with local tops and bottoms are likely to be different to previous cycles.

From a technical and chart perspective, the $90k to $100k zone will likely offer solid support.

It would require a significant change in current macro conditions for BTC to fall below this zone. That said, the probability of BTC revisiting the $90k to $100k zone is around 25%.  

The balance of probability (75%) is weighted toward further upward momentum in BTC, and a price level of $125k is likely in the short term.

At the $125k level, however, and based on average long-term holder unrealised profits metrics, the balance of probability is weighted toward a pullback or consolidation.

Anticipate some selling and the likely formation of a local top.

Probability Not Emotion

In periods where BTC is making all-time highs, it’s crucial to keep emotions in check by considering probabilities. 

Long-term holders are less prone to making emotional decisions. They act on data and long-term fundamentals, rarely chasing pumps or panicking on dips.

They take profits strategically and usually sell into strength at or near local tops.

That said, the direction of the BTC price at the $125k level will be determined by the balance between demand (driven by retail FOMO) and continued selling by long-term holders.

BTC could retest the recent all-time high at $119k as support, and if that holds, that could be a catalyst for a new all-time high beyond the $125k level.

Overstretched And Overheated

The MVRV ratio indicates that the average investor’s unrealised profits will start to become overstretched at $140k.  

If BTC reaches $175k (our 2025 target is $150k – $200k), then the current metrics suggest that the market will be overheated. The probability of BTC pushing through this level and staying above this level in 2025 is no more than 5%.

Sell-offs in this cycle remain a feature; however, they are now more likely to play out over weeks rather than days.

From a support and resistance perspective, if BTC dropped below the $90k to $100k support zone then the $70k high in 2024 would likely be the bottom in a bear market.