Bitcoin (CRYPTO: BTC) has re-entered the spotlight. After a dramatic surge in 2024, it’s becoming popular again, now trading at over $100,000 following a 140% year-to-date increase. Companies such as MicroStrategy are accumulating bitcoin, and discussions are underway in the upcoming Trump administration about forming a strategic reserve for it.

The present sentiment surrounding bitcoin is quite optimistic. However, seasoned investors know that this scenario has played out before. In the years 2013, 2017, and 2021, enthusiasm among investors peaked just before significant price drops. Could we be on the brink of another crash in 2025? Let’s delve into the details regarding bitcoin in December 2024 and assess if it should be part of your investment portfolio.

Bitcoin’s Spectacular Surge in 2024

The remarkable increase in bitcoin’s price throughout 2024 can be attributed to two main factors. Firstly, the approval of bitcoin and cryptocurrency exchange-traded funds (ETFs) in January made a big difference. Bitcoin ETFs have been acquiring billions of dollars’ worth of bitcoin for their clients, revealing a strong demand for these financial products. Including MicroStrategy’s purchases, nearly 700,000 bitcoins—accounting for 3.3% of the total 21 million bitcoins—have been bought by institutions this year.

Post ETF approval, bitcoin’s price jumped past $60,000, maintaining that range until shortly before the recent U.S. presidential elections. Following Donald Trump’s win, investor confidence surged further, significantly boosting bitcoin’s appeal. The incoming administration has suggested creating a Bitcoin Strategic Reserve, allowing the government to purchase and retain large quantities of bitcoin. While I have my reservations about taxpayer money being used this way, the potential reserve could positively influence bitcoin’s market value. Since the election results, we’ve seen bitcoin’s price leap nearly 50%, reaching around $106,000 at this moment.

It’s crucial to understand that bitcoin does not generate underlying earnings. The price increases are fueled by a growing number of people convinced of its value. With significant institutional investments and political pledges boosting the excitement, it’s not uncommon that bitcoin has surged beyond the $100,000 mark in late 2024.

Price Forecasts and Comparisons to Gold

Price predictions for bitcoin are highly diverse. Some experts speculate that it could reach $1 million or even $13 million per coin, while others argue it’s worth nothing at all. A common theme among these forecasts is that they often align with what would make the forecaster wealthier. For instance, MicroStrategy’s CEO, Michael Saylor, is the one suggesting the $13 million target.

Some investors perceive bitcoin as the new digital gold, hoping it surpasses gold as a primary store of value. Currently, gold has an estimated market capitalization of about $18 trillion. If bitcoin achieves that valuation, it could mean a price of $857,000 per coin, roughly eight times its current value. This optimistic view may keep investor interest piqued.

Embracing Uncertainty

Discussions around bitcoin can be endless and often frustrating. The harsh reality is that no one knows if bitcoin will crash, stabilize, or skyrocket in 2025. Anyone who claims to have a solid prediction is likely not being upfront, despite the possibility that they might eventually be correct. Predicting outcomes confidently is easy—like saying a dice will definitely land on six when the odds are one in six. This does not justify my confidence about the result.

View bitcoin in a similar context. You can choose to invest if you believe in its long-term potential as digital gold, currency acceptance, or for any other reason. However, do not trade it under the illusion that you can be sure of its trajectory in 2025. The only real certainty with bitcoin and cryptocurrency is that uncertainty reigns supreme.

Brett Schafer holds no shares in any of the stocks mentioned. The Motley Fool has positions in and endorses bitcoin. The Motley Fool adheres to a strict disclosure policy.

The Motley Fool collaborates with YSL News to deliver financial news, insights, and opinions aimed at helping individuals manage their financial affairs effectively. Its content is created independently from YSL News.

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