It's Been a Long, Strange Year for Bitcoin (BTC 2.53%)

It's been a long, strange year for Bitcoin (BTC 2.53%) -- and it's only March. The year started off with a lot of fanfare

It's been a long, strange year for Bitcoin (BTC 2.53%) -- and it's only March. The year started off with a lot of fanfare, as the cryptocurrency hit a new all-time high of $109,000 on Jan. 20. But it soon fell below $100,000. Then $90,000. And recently, it was below $80,000 briefly, before bouncing back just a bit.

But there's no time to panic. In fact, it might be time to buy the dip, and here's why.

The Strategic Bitcoin Reserve to the rescue?

The potential big catalyst for Bitcoin, of course, is the recent announcement of a Strategic Bitcoin Reserve. With an executive order from President Trump, the U.S. government has now moved to consolidate its holdings of Bitcoin. It will no longer be selling. That's a big move, given that the U.S. currently holds approximately 200,000 bitcoins.

But the Strategic Bitcoin Reserve is underwhelming in many respects. It does not directly commit the U.S. government to buying it, which was what the whole idea of the reserve was supposed to be. As originally planned, the U.S. government was supposed to buy 200,000 bitcoins per year for the next five years, giving it a very substantial hoard at the end of that time period.

So it's understandable that many crypto investors are disappointed about the Strategic Bitcoin Reserve. After briefly spiking higher on the news, the digital coin began to sell off.

Adding insult to injury, The Wall Street Journal editorial board called the reserve "fool's gold." That was particularly stinging, given that Bitcoin has typically been referred to as "digital gold."

From my perspective, the U.S. government is going to find a budget-neutral way (i.e., no taxpayer funds used) to buy new tokens, even if it means using some creative accounting moves. One methodology, according to Bloomberg, calls for the government to revalue its current gold holdings. Doing so could give it new leeway to buy Bitcoin. Others have suggested that any DOGE cost savings could be used to load up on Bitcoin.

The downside of being a mainstream asset

For much of its history, Bitcoin was largely uncorrelated with any other asset. That was part of its appeal: It could zig when other assets zagged. And it meant that Bitcoin could continue to go up, regardless of the overall economy. This made it a very special type of asset.

Image source: Getty Images.

But something very important happened in January of last year. That was when the new spot Bitcoin exchange-traded funds (ETFs) were launched, immediately making buying it as easy as buying a tech stock.

The product launch was wildly successful, and over $100 billion has flowed into these spot Bitcoin ETFs. Some of the biggest buyers were hedge funds, Wall Street investment banks, and investment management firms.

But there is a downside from going mainstream. It also makes the crypto much more susceptible to the daily ebbs and flows of macroeconomic news. The same people deciding which stocks to buy are also deciding which cryptos to buy. If there's news about tariffs, for example, that's going to affect Bitcoin. If there's news about a potential recession, then it is going to do the same.

The one factor that I'm watching right now is how much money is flowing into (and out of) the spot Bitcoin ETFs. These figures are reported by CoinShares every week and are easy to track.

If there are significant outflows, it's a pretty good bet that the crypto's price is going to have a hard time moving upward. And, conversely, if there are significant inflows, it suggests that Bitcoin will rebound soon. Right now, there have been four straight weeks of outflows, so things need to turn around fast.

Where will Bitcoin be at the end of 2025?

Some investors continue to cling to overly optimistic price estimates, confident that catalysts such as the Strategic Bitcoin Reserve are going to send the digital coin to the moon. They are fully expecting it to hit $150,000, and maybe even $200,000 this year. After all, it delivered triple-digit returns in 2023 and 2024 against a backdrop of economic weakness, so why not in 2025 as well?

The only problem is that the likelihood of it soaring to new all-time highs continues to decline. Right now, if you look at what online prediction sites are telling us, there is only a 27% chance of Bitcoin hitting $150,000 this year, and only a 17% chance of hitting $20