Why Bitcoin Could Hit $700K | Bitcoin Newsletter Week 4 of 2025

The Bitcoin Newsletter to keep you updated on all things Bitcoin

January 31, 2025

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TL;DR

  • BTC is up

  • Bitcoin dominance is up

  • Bitcoin's $700K Potential Revealed-BlackRock CEO

  • MicroStrategy Increases Stock for Bitcoin Strategy

  • Bitcoin ETF Inflows Surge

  • Rumble Begins Bitcoin Investments

  • Blockstream Unveils two Bitcoin Investment Funds

  • Lummis to Lead Senate Subcommittee on Digital Assets

  • Bitcoin Miners Thrive Amid Rising Network Difficulty

  • Brazilian Oil Giant Ventures into Bitcoin Mining

  • Bitcoin Mining Saves Texas $18B, Enhances Grid Stability

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Bitcoin Price

Crypto is up this week, with BTC up by 3.3% and ETH down by 0.2%:

Bitcoin dominance has increased over the week, starting from 54.7% to a high of 55.79% and ending at 55.2%. Investor sentiment, regulatory changes, technological advancements, and the overall growth of the cryptocurrency sector shape Bitcoin's market dominance. Its reputation as "digital gold" also enhances its position, making it a key player in the market.

It’s going to be interesting to see whether this trend will continue in the short term, as capital in crypto tends to flow initially to BTC and then further out on the risk-curve, starting with altcoins like ETH and then into mid- or low-cap coins.

Bitcoin's market momentum faced mixed signals this week as price action and on-chain metrics painted a complex picture for investors. After a 3% surge on Jan. 24, Bitcoin briefly touched $105,750, fueled by optimism surrounding a new executive order from The U.S. President Donald Trump.

The directive established a working group on digital asset markets, sparking speculation about the potential creation of a U.S. strategic Bitcoin reserve.

While no concrete plans for such a reserve were confirmed, investor enthusiasm was buoyed by comments from Bitcoin advocate Senator Cynthia Lummis, who hinted at significant developments in the digital asset space.

This bullish sentiment was reflected in institutional flows, with U.S. spot Bitcoin ETFs recording six consecutive days of capital inflows totaling $2.9 billion. The rise in ETF investments signals growing confidence in Bitcoin among institutional players, who view ETFs as a regulated gateway to exposure.

At the same time, technical indicators added to the bullish narrative, as Bitcoin broke out of a symmetrical triangle pattern on the three-day chart, suggesting a potential rally to $128,000 by March 2025. This optimistic forecast aligns with broader market expectations of Bitcoin reaching lofty targets, with some analysts projecting prices as high as $150,000 in 2025.

Tradingview

However, concerns are emerging as key on-chain metrics signal caution. CryptoQuant’s Index of Bitcoin Cycle Indicators (IBCI), which aggregates seven critical metrics including the Puell Multiple and Net Unrealized Profit/Loss (NUPL), entered the "distribution region" this week.

Historically, this zone has preceded market corrections and the onset of bearish trends. While the IBCI has not yet hit the 100% threshold associated with definitive cycle tops, its current position suggests that Bitcoin may be approaching a turning point.

The Puell Multiple, often used to gauge miner profitability and market tops, remains below critical danger levels, offering some reassurance for now.

Short-term risks are also underscored by analyst Timothy Peterson, who highlighted a strong correlation between the current bull run and the 2015–2017 cycle. He predicts that Bitcoin could reach $137,000 in this cycle before retracing to a local bottom below $100,000.

This forecast aligns with CryptoQuant’s cautionary stance, suggesting that while further growth is possible, the market is not immune to corrections in the near term. Peterson has also maintained a long-term outlook of $1.5 million per Bitcoin by 2035, underscoring the asset’s potential in the broader financial ecosystem.

Broader macroeconomic factors remain pivotal for Bitcoin’s trajectory. The executive order from the Trump administration highlights increasing government focus on digital assets, which could influence market dynamics in the months ahead.

Meanwhile, Bitcoin's price action continues to resonate with institutional and retail sentiment, as evidenced by recent inflows into ETFs and bullish breakout patterns. Yet, as on-chain indicators and analyst warnings suggest, the road ahead may not be entirely smooth.

As Bitcoin consolidates around the $105,000 mark, it remains at the crossroads of optimism and caution. The interplay between government policies, institutional inflows, and technical signals will likely shape its near-term performance.

With key levels like $90,000 and $137,000 under watch, the market faces a critical phase where both opportunities and risks are amplified.

Bitcoin (BTCUSD) Analysis:

As of January 24, 2025, Bitcoin (BTC) is trading at $104,609. The short-term outlook is positive, with support at $92,500 and no immediate resistance, indicating further upward potential. The medium-term view is neutral, with Bitcoin testing resistance at $106,000; a breakout above this could signal more gains. In the long term, the trend remains bullish, with support at $72,000 and no resistance in sight, suggesting continued upward momentum.

Expected Trading Ranges:

  • Bitcoin (BTC): Support at $92,500; Resistance at $106,000.

Market Outlook:

Bitcoin's market shows mixed signals. Bullish sentiment, driven by institutional inflows and potential U.S. policy moves, contrasts with on-chain indicators suggesting a cycle top may be near. While further upside to $137,000 is possible, caution is advised as risks of a correction grow.

BTC/ETH ratio has seen an increase:

Over the past six days, the BTC to ETH conversion rate has experienced a general increase. Bitcoin has strengthened against Ethereum, rising by 1.43% on January 24, and showing a notable gain of 6.05% over the past 30 days. While there were some minor fluctuations, such as a slight decrease on January 23 (-2.36%) and smaller dips on January 19 and 20, the overall trend has been positive, with Bitcoin increasing in value relative to Ethereum.

“Bitcoin is so much more epic than Trump coin.”

Financial News

BlackRock CEO Larry Fink, speaking at the World Economic Forum, projected Bitcoin’s price could hit $700,000 if institutions allocated just 1% of their portfolios to the asset. Once a Bitcoin critic, Fink now champions it as a hedge against economic instability, calling it a "currency of fear."

BlackRock, holding over 569,000 BTC via its iShares Bitcoin Trust, has embraced Bitcoin’s potential, citing its value as a store of wealth and inflation hedge. With institutional interest growing and BlackRock driving adoption, Fink’s forecast underscores Bitcoin’s evolving role in global finance despite its volatility.

MicroStrategy Increases Stock for Bitcoin Strategy

MicroStrategy shareholders approved amendments to raise the number of authorized Class A common and preferred stock, bolstering the company’s bitcoin acquisition efforts. This move supports its ambitious "21/21 plan," revealed in October, which aims to secure $21 billion in equity and $21 billion in fixed-income securities to expand its bitcoin holdings.

As of January 20, the company reported $5.42 billion worth of shares still available for sale, targeting a total of $42 billion for bitcoin purchases. The approval underscores MicroStrategy’s continued commitment to its bitcoin-focused strategy, signaling strong confidence in the cryptocurrency as a key reserve asset.

In the last six days, U.S. Bitcoin spot ETFs have seen over $3.6 billion in inflows, signaling growing institutional interest. On January 23, the net inflow was around $188.7 million, with BlackRock's IBIT ETF leading the way, securing $154.6 million.

This trend highlights Bitcoin's increasing acceptance within regulated financial markets. In contrast, Ethereum ETFs saw net outflows of $14.9 million on the same day, suggesting differing investor sentiment toward Bitcoin and Ethereum. This contrast underscores the shifting dynamics in the cryptocurrency market.

Nasdaq has filed with the SEC to enable in-kind redemptions for BlackRock’s iShares Bitcoin Trust (IBIT), allowing institutional investors to redeem ETF shares for Bitcoin rather than cash. This move promises to lower redemption costs, enhance efficiency, and reduce Bitcoin sell pressure during withdrawals.

Currently, cash redemptions dominate, but in-kind transfers offer tax benefits and operational advantages. The filing aligns with pro-Bitcoin regulatory changes under the Trump administration, including the repeal of SAB 121. With IBIT already attracting $60 billion in inflows, Nasdaq’s proposal could make the ETF even more attractive to institutional participants and bolster its market dominance.

On January 23, President Donald Trump signed an executive order to establish a working group for researching digital asset markets and potentially creating a national digital asset stockpile. Although this marks progress, the executive order did not announce a Bitcoin-specific reserve, leading to disappointment in the crypto market.

Bitcoin briefly fell to $102,220 after the order was signed, following a rally earlier due to speculation sparked by Senator Cynthia Lummis’ social media post. Despite the soft market reaction, many see this as a step toward Bitcoin’s broader adoption in U.S. policy.

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Adoption News

Rumble, a $3.6 billion video platform, has entered the cryptocurrency market by purchasing up to $20 million worth of Bitcoin as part of its treasury strategy. CEO Chris Pavlovski confirmed this marks the company’s first Bitcoin acquisition, with plans for additional purchases in the future.

This move underscores Rumble's commitment to integrating Bitcoin into its financial reserves, reflecting growing confidence in cryptocurrency adoption in corporate finance. The announcement has fueled discussions and optimism about Bitcoin's role in business strategies, positioning Rumble as a notable player in the ongoing shift toward digital assets.

Blockstream has launched two Bitcoin-focused institutional funds: the Income Fund and the Alpha Fund. Announced on January 23, the Income Fund provides USD-denominated yields by issuing Bitcoin-backed loans ranging from $100,000 to $5 million. Meanwhile, the Alpha Fund targets portfolio growth through infrastructure revenue streams, such as Lightning Network operations, with an actively managed structure.

These funds cater to growing institutional interest in Bitcoin investments, joining similar offerings from Grayscale and Galaxy Digital. The rising demand aligns with the success of Bitcoin ETFs, which recently reached $120 billion in net assets, further solidifying Bitcoin's appeal in institutional finance.

Massachusetts has introduced the "Commonwealth Bitcoin Strategic Reserve" bill, led by Senator Peter Durant, proposing up to 10% of the state’s $9 billion stabilization fund be allocated to Bitcoin and other digital assets. If passed, Massachusetts would become the first deep blue state to adopt Bitcoin reserves, joining states like Texas and Wyoming in integrating Bitcoin into financial strategies.

The bill emphasizes diversification, enabling secure custodianship, ETP investments, and asset lending for returns. While supporters highlight Bitcoin’s potential as an inflation hedge and innovation driver, concerns about its volatility remain. The bill awaits review by State Treasurer Deb Goldberg.

Utah has proposed the “Blockchain and Digital Innovation Amendments (H.B. 230),” sponsored by State Representative Jordan Teuscher, to allocate up to 10% of public funds to Bitcoin and other eligible digital assets. The bill emphasizes fiscal sovereignty, requiring strict security measures, including encrypted cryptographic key storage in secure data centers. Residents will maintain full rights to self-custody digital assets.

With Bitcoin as the primary qualifying asset, the bill positions it as an inflation hedge and economic safeguard. If passed, Utah would become the 11th state to embrace Bitcoin, reflecting the growing national momentum toward digital asset adoption.

Wyoming Senator Cynthia Lummis has been appointed to chair the Senate Banking Subcommittee on Digital Assets, a key role in shaping U.S. digital asset regulation. Her focus will be on passing comprehensive digital asset laws, including stablecoin regulations and establishing a Bitcoin strategic reserve.

Lummis' appointment has sparked speculation about the reserve's potential, with figures like Binance’s Changpeng Zhao and Coinbase’s Brian Armstrong supporting the idea. While several states have introduced similar initiatives, the likelihood of a federal Bitcoin reserve remains uncertain, with some analysts questioning its compatibility with U.S. economic policies.

Mining News

Bitcoin miners are maintaining threefold profit margins despite increased network difficulty, with the cost to mine one BTC at $33,900 versus a market price of $105,578 as of Jan. 21, per Glassnode. However, competition and rising hashrates, now between 700 and 900 EH/s, challenge profitability.

Miners are diversifying into AI and high-performance computing for added revenue, as seen with Hive Digital. Many are also holding more Bitcoin, inspired by firms like MicroStrategy. Miner resilience has bolstered the network and energy grids, exemplified by Texas saving $18 billion due to their grid-stabilizing efforts.

Brazilian oil giant Petrobras is launching a research and development project exploring Bitcoin mining and blockchain applications as part of its low-carbon transition strategy. The initiative includes tokenization, consensus mechanisms, and process modeling.

Petrobras joins a growing list of oil companies, such as Argentina’s Tecpetrol and Gazpromneft, utilizing excess natural gas for Bitcoin mining. This innovative use of energy resources integrates sustainability with blockchain technology, highlighting the intersection of the oil industry and cryptocurrency mining.

Riot Platforms is pivoting to artificial intelligence (AI) and high-performance computing (HPC), repurposing 600 MW of unused power to diversify revenue streams. The company has paused its Phase II Bitcoin mining expansion at Corsicana, initially planned to add 600 MW of mining capacity.

Riot revised its 2025 hash rate target to 38.4 EH/s, lowering capital expenditures by $245 million. Despite a 17% yearly Bitcoin production decline, Riot’s holdings surged 141% in 2024. CEO Jason Les highlighted the strategic shift's potential to maximize asset value and ensure long-term benefits for shareholders by tapping into the growing AI and HPC sectors.

A report by the Digital Assets Research Institute (DARI) reveals Bitcoin mining has saved Texas $18 billion by reducing reliance on costly gas peaker plants. These plants, traditionally used for peak electricity demand, are inefficient, emit greenhouse gases, and remain idle for most of the year.

Through ERCOT's demand response programs, Bitcoin miners voluntarily reduce energy consumption during peak demand, stabilizing the grid while integrating renewable energy sources like wind and solar. Despite political resistance, proponents like Senator Ted Cruz emphasize Bitcoin mining's role in creating jobs and leveraging Texas' abundant, low-cost energy resources.

AgriFORCE Growing Systems has acquired a 5 MW Bitcoin mining facility in Ohio for $4.55 million, utilizing natural gas for sustainable energy solutions. The move highlights AgriFORCE’s strategy of leveraging stranded gas assets for operational efficiency. Dr. Barrett Mooney, appointed as COO, aims to integrate sustainable agricultural practices with cryptocurrency mining, aligning with the company's focus on innovation and sustainability.

This acquisition strengthens AgriFORCE's commitment to merging advanced technology with sustainability, ensuring steady revenue streams and a leadership position in environmentally conscious industries.

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