In a recent post on social media platform X, cryptocurrency analyst Bit Paine presented a compelling forecast for the value of Bitcoin (BTC) reaching $1 million by January 3, 2025.
Paine provides an in-depth analysis, highlighting key factors that could drive this significant value increase.
Analyst Predicts Potential Supply Shock in Bitcoin Market
Paine’s analysis lies in the forthcoming five years, during which approximately 750,000 new Bitcoins are expected to be mined. Drawing from historical patterns, the analyst estimates that 20-30% of the existing Bitcoin supply will likely become available for sale during the upcoming bull market.
The math behind $1M / #BTC by Jan 3, 2025 is simple:
In the next 5 years, 750,000 #BTC will be mined.
Based on prior cycles, about 20-30% of the existing supply will become available for sale in the bull.
I tend to think it’ll be lower than prior cycles (~10-15%) for many…
— Bit Paine ⚡️ (@BitPaine) January 2, 2024
However, Paine diverges from conventional expectations, positing a more conservative estimate of 10-15% due to several compelling reasons.
These include the recent emergence from a prolonged bear market, the ascendance of Bitcoin maximalists (“maxi hodlers”), the diminishing significance of “crypto” as a generic asset class (with a reduced inclination to rotate funds into alternative cryptocurrencies or “alts”), and the increasing recognition of Bitcoin as a treasury-class asset.
Factoring in these considerations, Paine anticipates an additional 2-6 million Bitcoins entering the market, bringing the total supply in circulation to approximately 2.75-6.75 million.
The catalyst for the projected surge is the anticipated influx of capital into the Bitcoin market. Paine estimates $1-5 trillion of capital is poised to enter the market over the next five years, driven by the increasing accessibility of this asset to institutional and retail investors alike.
Paine’s analysis aligns with the notion that most gains in the Bitcoin market typically occur within the first year following a halving event characterized by speculative fervor. Subsequently, a more gradual distribution of gains is expected.
Bitcoin Surges Above $45,000 and Dumps Later
Bitcoin surged past $45,000 on Tuesday, reaching its highest level since April 2022, as optimism surrounding the potential approval of exchange-traded spot Bitcoin funds fueled the market. The cryptocurrency reached a 21-month peak of $45,922, marking a strong start to the new year.
Investor attention has been focused on the potential approval of a spot Bitcoin ETF by the U.S. Securities and Exchange Commission (SEC). Such approval is anticipated to open the market to a broader investor base and attract significant investments.
However, the landscape changed later during the day, as BTC slumped by $3,000. This came amid reports that the US securities regulator might actually reject all spot ETF applications in January, just like it has done countless times in the past.