"Bitcoin's Down Again After Trump Disappointment. Reasons to Be Cheerful."

Bitcoin's price took a hit after President Trump's executive order establishing a U.S. Strategic Bitcoin Reserve failed to meet some investors' expectations. The market reacted negatively to the revelation that the reserve would only consist of seized Bitcoin, rather than the U.S. government actively purchasing more. This sent the market into a freefall, deepening uncertainty and the tribal divide over the government’s long-term role in Bitcoin’s future. However, despite this short-term disappointment, there are several reasons to be cheerful about Bitcoin's long-term prospects.

Firstly, the U.S. government's recognition of Bitcoin as a strategic asset is a historic moment for the cryptocurrency. This move signals a major shift in policy, placing Bitcoin alongside traditional reserves like gold. This legitimization can boost global trust in Bitcoin, making it more attractive to investors and institutions. As AccountingInsights.org explains, "the concept of a store of value is vital for understanding how assets retain their worth over time." This recognition can provide individuals and businesses with confidence in preserving purchasing power against inflation or market fluctuations, positioning Bitcoin as a "hedge" against inflation.



Secondly, the current macroeconomic indicators and on-chain metrics suggest a bullish outlook for Bitcoin in 2025. The MVRV Z-Score, which measures the ratio between Bitcoin's realized price and its market cap, currently suggests significant upside potential. The Z-Score is hovering at levels comparable to May 2017, when Bitcoin was valued at only a few thousand dollars. Historically, the Z-Score reaching values above 7 has indicated market peaks, but anything above 6 prompts a closer look at other metrics. Given the current Z-Score, there is room for multiple hundreds of percent in potential gains from current levels. This aligns with historical cycles where Bitcoin has experienced substantial price increases after similar Z-Score levels.

The Pi Cycle Oscillator, which tracks the 111-day and 350-day moving averages, has started to trend upward again. This suggests renewed bullish momentum, indicating that Bitcoin is entering a stronger growth phase. Historically, when these averages cross, it often signals a Bitcoin price peak within days. The current trend aligns with previous cycles where a breakout in the Pi Cycle Oscillator has led to significant price increases.

Bitcoin's historical price action often features a "post-halving cooldown" lasting 6–12 months before entering an exponential growth phase. Based on previous cycles, we are nearing this breakout point. While diminishing returns are expected compared to earlier cycles, we could still see substantial gains. For context, breaking the previous all-time high of $20,000 in the 2020 cycle led to a peak near $70,000—a 3.5x increase. If we see even a conservative 2x or 3x from the last peak of $70,000, Bitcoin could realistically reach $140,000–$210,000 in this cycle. This aligns with the historical pattern of exponential growth phases following halving events.

Despite headwinds in 2024, Bitcoin performed strongly, even in the face of a strengthening U.S. Dollar Index (DXY). Historically, Bitcoin and the DXY move inversely, so any reversal in the DXY’s strength could further fuel Bitcoin’s upside. Other macroeconomic indicators, such as high-yield credit cycles and the global M2 money supply, suggest improving conditions for Bitcoin. The contraction in the money supply seen in 2024 is expected to reverse in 2025, setting the stage for an even more favorable environment. This aligns with historical cycles where macroeconomic factors have influenced Bitcoin's price movements.

The Bitcoin Cycle Master Chart, which aggregates multiple on-chain valuation metrics, shows that Bitcoin still has considerable room to grow before reaching overvaluation. The upper boundary, currently around $190,000, continues to rise, reinforcing the outlook for sustained upward momentum. This aligns with historical cycles where Bitcoin has experienced prolonged periods of growth before reaching overvaluation.



In conclusion, while the recent executive order has introduced some short-term volatility and uncertainty, it also represents a significant step towards legitimizing Bitcoin as a strategic asset. This recognition could have a positive long-term impact on the investment outlook for Bitcoin, potentially reducing volatility and increasing its appeal as a store of value. The current macroeconomic indicators and on-chain metrics suggest a bullish outlook for Bitcoin in 2025, with significant upside potential for its price in the coming months. Despite the short-term disappointment, there are plenty of reasons to be cheerful about Bitcoin's long-term prospects.