Bitcoin evenly balanced between optimism and pessimism; whether liquidity increases is a factor for a rebound

Prices likely to be significantly adjusted in the first half

Could fall to 65,000 dollars

Still undervalued compared with gold…ample upside

JPMorgan "Could rise to 170,000 dollars"

Last year the bitcoin market swung between extremes. Bitcoin prices fell through April due to the effects of the U.S.'s aggressive tariff policy, then went on a six-month rally and repeatedly hit all-time highs. However, after that, expectations for rate cuts weakened and worries about tightening liquidity mounted, and the year ended at prices lower than a year earlier. In financial circles, pessimism that bitcoin will remain weak this year and optimism that it will again hit record highs are clashing.

◇Three months of weakness … '60,000 dollars' forecast too

Bitcoin evenly balanced between optimism and pessimism; whether liquidity increases is a variable for a reboundAccording to cryptocurrency exchange Upbit on the 4th, bitcoin traded in the high 120 million won range on December 31 last year. It finished the year without rebounding to the 130 million won range. It fell about 28% after hitting an all-time high (179.87 million won) on October 9 last year. It has fallen below the end of 2024 (139.25 million won as of 9 a.m.). This is the first time bitcoin returns have been negative in three years since 2022.

As the crypto market has not escaped weakness for three months, there are many views that a rebound will not be easy this year either. Fundstrat's Sean Farrell, head of digital asset strategy, recently forecast in an internal client report that crypto prices could be significantly adjusted in the first half of this year. He said bitcoin could fall to 60,000–65,000 dollars. He cited investors' selling pressure and a reduction in tradable funds across the crypto market as reasons. Although the U.S. central bank (Fed) lowered the policy rate by 0.25% points at the end of last year, it signaled it would show a hawkish (tightening) stance going forward, weakening hopes for a liquidity-driven market. The Fed presented a median U.S. policy rate for this year of 3.4%, which is 0.35% points lower than now. That implies the number of rate cuts over a year could be limited to just one.

Even previously optimistic investment banks have recently lowered their expectations. Bernstein had expected bitcoin to rise to 200,000 dollars but recently lowered its target to 150,000 dollars. Standard Chartered (SC) also cut its target for this year from 300,000 dollars to 150,000 dollars. Jeffrey Kendrick, head of SC digital asset research, said, "The inflow speed into spot bitcoin exchange-traded funds (ETFs) is slowing and companies' additional buying power has weakened," adding, "The pace of bitcoin price increases will be slower than in the past."

◇JPMorgan and Citi have optimistic outlooks

There are also many optimistic forecasts that bitcoin will have hit a bottom and return to an uptrend. JPMorgan sees bitcoin rising to 170,000 dollars, judging it still undervalued compared with gold, the flagship safe asset. JPMorgan analyzed, "Bitcoin's price movements are increasingly resembling those of gold," and "There is room to rise up to 84% over the next 6–12 months."

It also viewed as a positive change that MicroStrategy, the world's largest holder of bitcoin, recently secured about 1.4 billion dollars in cash. JPMorgan said, "They now have resources to pay dividends and interest for the next two years," and "the likelihood of them selling bitcoin has greatly decreased." It also suggested that if MicroStrategy remains in the Morgan Stanley Capital International (MSCI) index, bitcoin could reach a new all-time high again.

Citigroup also maintains a positive outlook. It expects bitcoin to rise to 143,000 dollars this year. Citi said, "The 'Clarity Act,' which gives the Commodity Futures Trading Commission (CFTC) supervisory authority over cryptocurrencies, could provide institutions with clear rules and give them confidence to invest," and "about 15 billion dollars could flow into spot bitcoin ETFs over the next year."

Amid coexisting opposing views, attention is also focused on the four-year cycle theory, in which prices repeatedly surge and crash around the halving when bitcoin supply is cut in half. Bitcoin is designed to halve mining rewards about every four years. The core of the four-year cycle theory is that, after the halving, bitcoin prices surge for about one to one and a half years due to supply shortages and then plunge 70–80%. The most recent halving was in 2024.

However, many argue that the four-year cycle theory should be viewed differently because the three previous halvings (2012, 2016, 2020) all occurred in an ultra-low interest rate era. In the three previous halvings, liquidity increases supported by low interest rates strongly pushed up bitcoin prices, but after 2024 it was the emergence of spot bitcoin ETFs and regulatory easing by U.S. President Donald Trump that acted as positive factors rather than interest rates.

Experts say that for these reasons the biggest variable driving bitcoin's rebound will be how much global market liquidity increases in the future. Kim Min-seung, head of the Korbit Research Center, said, "If the Fed's tightening ends in the first half of this year and preference for risk assets strengthens, bitcoin could once again challenge new highs," and "I pay attention to the possibility that the 150,000–200,000 dollar predictions given by experts early last year may not have been wrong but could arrive later this year."

Jinseong Kim jskim1028@hankyung.com