As of early May 2025, there are indeed strong indications that the cryptocurrency market, led by Bitcoin, is experiencing a significant uptick, with many analysts discussing the potential for a new rally.
Potential Drivers for a Rally
Renewed ETF Inflows: After a temporary slowdown, U.S. spot Bitcoin ETFs are reportedly seeing renewed inflows, indicating sustained institutional interest. BlackRock's Bitcoin ETF has been noted for its rapid growth. $iShares Bitcoin Trust(IBIT)$
Supply Dynamics: The supply of Bitcoin on centralized exchanges has reportedly dropped to its lowest level since December 2021, suggesting a trend of investors moving BTC to self-custody for long-term holding, which typically reduces selling pressure.
Regulatory Developments: Improved regulatory clarity, such as the EU's Markets in Crypto Assets (MiCA) regulation and a potentially more pro-crypto stance in the U.S. (including discussions around rescinding SAB 121 which discouraged banks from crypto custody), are seen as positive factors. Further ETF approvals, potentially for assets like Solana and XRP, are also anticipated by some.
Institutional Adoption: Beyond ETFs, major financial technology companies like $Robinhood(HOOD)$ and PayPal are expanding their crypto offerings. One of the significant institutions holding Bitcoin as well, is $Strategy(MSTR)$.
I am holding onto my position in Strategy though I was toying whether to sell some when it hit $500.
MicroStrategy owns 555,450 bitcoins as of 05 May 2025. MicroStrategy states the average purchase price as $66,384.56 USD per bitcoin with a total cost of $33.139 billion USD.
If we looked at how Strategy have been trading recently with the Bitcoin price in volatile movement, it had maintained the momentum, RSI have been gaining and reaching overbought region soon, and the bulls are in control.
The daily uptrend build have been growing well, and I am expecting the bulls to make a daily uptrend expansions and make a daily uptrend continuation.
Another smaller potential miner we can look at is $Hut 8 Mining Corp(HUT)$
Cyclical Patterns: Historically, crypto markets have seen peaks 12 to 18 months after a Bitcoin halving event (the last one being in April 2024). If this pattern holds, late 2025 could mark a new market high.
Macroeconomic Factors: A broader "risk-on" sentiment in global markets, with equities performing well, appears to be supporting crypto. The potential for Federal Reserve interest rate cuts in 2025 is also cited as a bullish factor.
Growing Network Usage and Social Sentiment: Increased on-chain activity and positive social media chatter can indicate returning retail interest.
Bitcoin's Performance and All-Time Highs
Approaching/Testing All-Time Highs: Bitcoin has recently surpassed the $100,000 mark (trading around $101,000 - $102,000 as of May 8-9, 2025).
It is reportedly very close to its previous all-time high, which some sources place around $109,225 (set in late 2024 or January 2025). One report on May 8, 2025, indicated Bitcoin was only about 7.44% away from this peak.
Many experts and traders are predicting that Bitcoin could break its all-time high in May 2025.
We are seeing an increase in the active addresses on the Bitcoin Network, this is encouraging as an increase in active addresses on the Bitcoin network is generally considered a bullish signal for Bitcoin by many analysts.
However, like any single metric, it should be interpreted with caution and in conjunction with other indicators. So what is meant “What are Active Addresses?
An "active address" on the Bitcoin network is a unique address that was involved in a successful transaction (either as a sender or receiver) within a specific period, typically daily. It's a way to measure user engagement and network activity.
Why an Increase is Often Seen as Bullish
Increased Network Usage and Adoption: A rising number of active addresses suggests that more people are using the Bitcoin network to transact. This can indicate growing adoption, utility, and overall network health.
Growing Demand: Higher activity often correlates with increased interest and demand for Bitcoin. As more participants enter the market or become more active, it can provide the "fuel" needed for a price rally to be sustainable.
Network Effects: The value and utility of a network often increase as the number of participants grows (Metcalfe's Law). More active users can make the network more valuable and attractive to others.
Confirmation of Price Trends: During price rallies, an increase in active addresses can confirm the strength of the trend, suggesting that the price movement is backed by genuine user activity and demand rather than just speculation. Conversely, rallies without a corresponding rise in active addresses might be seen as less sustainable.
Historical Correlation: Historically, significant spikes in active addresses have often coincided with periods of heightened price volatility or bullish momentum. For example, past bull markets have seen peaks in active addresses (e.g., around 1.2 million daily active addresses during the 2017 and 2021 bull markets).
While a rise is generally positive, the absolute number of active addresses should be compared to historical levels. A recent uptick to, say, 800,000 active addresses (as noted in some April/May 2025 reports) is positive, but still potentially below peaks seen in previous major bull runs, suggesting room for further growth in user engagement.
No single on-chain metric can guarantee future price movements. Active addresses should be analyzed alongside other indicators like transaction volumes, exchange flows, whale activity, market sentiment (e.g., Fear & Greed Index), and macroeconomic factors.
Bitcoin’s On-Chain Volume
So the next indicator I would look at is the on-chain volume for Bitcoin, short-term spikes in active addresses can occur during periods of high volatility (both up and down) as traders reposition themselves. It's important to look at the sustained trend.
An increase in active addresses doesn't always mean new, unique users are joining. It could be existing users transacting more or entities creating many addresses. However, a sustained upward trend is generally viewed positively.
Some analysts note that extreme spikes in on-chain activity, including active addresses, can sometimes align with market tops (due to euphoria and late entrants) or bottoms (due to panic selling and opportunistic buying).
If prices rise but active addresses or trading volumes stagnate or decline, it could suggest weakening momentum or that fewer participants are driving the rally.
So using on-chain volume where we are seeing increasing volume with prices rising, this mean that momentum is increasing and there would be an increasing number of participants driving the rally as well.
Broader Crypto Market Sentiment
The positive momentum is not solely confined to Bitcoin. Other crypto assets like Ethereum (ETH), XRP, and Solana (SOL) have also seen positive movements, although there can be mixed short-term trends among them.
The total crypto market capitalization has been reported to be around $2.91 trillion to $2.94 trillion in early May.
There is discussion about the potential for an "AltSeason," where alternative cryptocurrencies experience significant gains, possibly following Bitcoin's lead.
Important Considerations and Risks
While we are seeing positive signs and also factors supporting a possible rally but we need to consider some factors and the risks that could derail any false sentiment.
Volatility: The crypto market remains inherently volatile. Significant price swings can occur rapidly.
Profit-Taking: Rallies can be followed by phases of profit-taking, which can dampen momentum.
Macroeconomic Shifts: Unexpected changes in the macroeconomic landscape or shifting expectations around interest rates or inflation could impact the market.
Regulatory Uncertainty: While there's optimism in some quarters, regulatory actions can still pose risks.
Market Sentiment Indicators: While there's excitement, indicators like the Crypto Fear & Greed Index were reported to be in the "Fear" zone as of early May, suggesting underlying caution among some traders.
Summary
While it is always challenging to definitively call the start of a sustained rally, many signs in early May 2025 point towards a strong bullish phase for Bitcoin and the broader crypto market. Bitcoin's approach to new all-time highs, coupled with positive institutional and retail sentiment and supportive macroeconomic factors, fuels this optimism.
Many analysts are bullish, with some forecasting Bitcoin could reach $120,000 by mid-2025 and potentially $200,000 or even $250,000 by the end of 2025. Longer-term predictions from figures like Cathie Wood's ARK Invest suggest even higher valuations.
Specific price targets for Bitcoin in May 2025 from some analysts range between $110,000 and $125,000, with some platforms suggesting an average price around $121,845.
Appreciate if you could share your thoughts in the comment section whether you think some of the crypto stocks are now at a discount to load up to take advantage of a rally which could be helped by higher Bitcoin prices.
@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.
Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.
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