In 2024, Bitcoin will become the best-performing asset in the world with a 135% increase . However, the market is no stranger to Bitcoin’s amazing performance. After all, in the past ten years, Bitcoin has topped the list of the world’s strongest assets eight times. It is no exaggeration to say that long-term holding of Bitcoin has become the best win-win strategy in the past decade. Looking forward to 2025, almost most institutions are highly optimistic about the Bitcoin market in 2025. According to Coindesk, eight institutions including CoinShares, Galaxy Digital, VanEck, Bitwise, and Standard Chartered Bank predict that the lower limit of Bitcoin's target range in 2025 will be $150,000. So, can Bitcoin continue its glory in 2024?

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The author believes that Bitcoin still has the potential to reach a record high in 2025, but I have a different view on the degree of optimism about the market.

As we all know, the optimistic expectations of most institutions are mainly based on the presence of Bitcoin in institutional investment portfolios On the basis that the proportion of Bitcoin will further increase, and the realization of this expectation requires Trump to fulfill his promise to include Bitcoin in reserves. According to data from the World Gold Council, as of September 2024, the United States' gold reserves are 8,133.5 tons, worth approximately US$700 billion. Considering that the circulating market value of Bitcoin is about one-tenth that of gold, the theoretical size of the United States’ Bitcoin reserves will reach $70 billion. Even if the United States has obtained approximately US$20 billion worth of Bitcoin through law enforcement, its theoretical purchasing space can still reach US$50 billion.

In addition, U.S. pension funds generally allocate 1%-2% of their funds in gold. Between $400 billion and $800 billion. However, pension funds have almost zero allocations to Bitcoin (just a few hundred million dollars in size). If the layer takes the lead in allocating Bitcoin, the pensionand large enterprises are bound to follow, which will bring huge increments to the crypto market.

It can be said with certainty that the inclusion of Bitcoin in reserves will not boost the crypto market at all. Bitcoin ETF approved. As long as this goal is achieved, it is entirely natural for Bitcoin to break through $150,000 in 2025. However, the crux of the matter is that it will not be easy for Trump to make Bitcoin a reserve.

Currently, there are three main ways for Trump to quickly build Bitcoin reserves:

First, the Federal Reserve purchases Bitcoin through open market operations and incorporates it into its balance sheet. This measure requires only a vote by the FOMC and does not require congressional approval.

Second, after Trump took office, he signed an executive order instructing the U.S. Treasury Department to use foreign exchange. The Stability Fund (ESF) purchases Bitcoin directly.

Third, the Ministry of Finance has established a special investment plan for Bitcoin and clarified the source of funds (such as issuance bonds, or fiscal transfers), and then implemented after approval by Congress.

Judging from the current situation, the possibility of Bitcoin being included in reserves through the Federal Reserve is slim. First, the Fed's open market operations mainly involve bonds and backed securities, and there is almost no record of buying gold, let alone buying highly volatile assets such as Bitcoin.

Secondly, on December 20, Federal Reserve Chairman Powell held a press conference after the monetary meeting It has been made clear that the Fed has no intention of participating in any scheme to hoard Bitcoin. He emphasized that such issues are the responsibility of Congress and that the Fed is not seeking to change existing laws to allow the holding of Bitcoin. Powell's statement was interpreted by the outside world as a mild objection to the Bitcoin reserve plan.

Establishing a special financial investment plan is considered to have more long-term legal support. However, using fiscal revenue involves budget allocation and issuing bonds involves financing, both of which require congressional approval. This makes the implementation of the fiscal plan lengthy and full of uncertainty.

Taken together, the second way-Trump instructs the Treasury Department through an executive order Using the Exchange Stabilization Fund (ESF) to buy Bitcoin is the most feasible option within the purview of the President of the United States. However, even if this approach is theoretically feasible, it still faces multiple challenges, not least congressional oversight and risks.

To some extent, the Fed's attitude reflects that of Wall Street. It is feasible for these vested interests to increase their income by increasing their Bitcoin business, but it is almost impossible to get them to give up their financial dominance and pave the way for Bitcoin. As White House crypto director David Sacks predicts, it may take a catastrophic sovereign currency crisis for the market to recognize Bitcoin as a mainstream currency. Therefore, after Powell’s speech, PolyMarket’s trading pricing showed that the probability of Bitcoin becoming a U.S. reserve fell from 36% on December 20, 2024 to 24% on January 3, 2025.

From a macro perspective, 2025 is also the year when a black swan is most likely to appear in the global capital market.

First of all, due to the rebound in inflation and the impact of additional tariffs, the market has generally lowered the Fed's interest rate cut next year. It is expected that some Wall Street institutions have even given forecasts to start raising interest rates in the second half of next year. As a result, the yield on the U.S. 10-year Treasury note continued to rise on the back of the Federal Reserve's interest rate cuts, exceeding the federal funds rate for the first time in the past two years. This has a significant crowding-out effect on the liquidity of risky assets.

Secondly, in the context of the Fed shrinking its balance sheet, the expansionary fiscal policy of the United States is to support U.S. stocks and removeA key factor in the prosperity of the fee market. If the new spending cuts are drastic, the market will risk losing momentum support.

Of course, the author does not believe that the benefits of Trump’s new encryption policy have been fully digested by the market. However, these positive factors have brought more transactional opportunities in the market, such as opportunities for Bitcoin band operations and opportunities in certain cryptographic segments (such as asset tokenization, AI Agent, DeFi, etc.). In terms of operation, the author tends to believe that Bitcoin will increase by 30% to 40% in 2025, and the corresponding target range is US$122,000-130,000. Therefore, it is also a relatively stable strategy to appropriately reduce positions above $122,000. ‍‍‍‍