Bitcoin's Bullish Q1 Trends Bode Well For IBIT, Upgrading To Buy Ahead Of 2025

Summary I have a buy rating on the iShares Bitcoin Trust ETF due to bullish 2025 price targets, positive seasonals, and technical trends. Bitcoin's 133% YTD performance and potential for further gains make it a compelling investment, despite its historical volatility and downside risks. The incoming Trump administration's potential National Bitcoin Reserve and favorable regulatory backdrop could serve as significant bullish catalysts in 2025. IBIT offers a convenient way to gain bitcoin exposure with lower transaction costs, and its growing AUM and trading volume reflect strong investor interest. Wall Street’s crystal balls are out in full force. With just a few trading days left in 2024, S&P 500 price forecasts are generally bullish (for the first time in three years) while prognostications for bitcoin are likewise sanguine. According to data gathered by Bitwise, the average 2025 price target for bitcoin is above $170,000. Of course, this is not as pure of a sellside look compared to SPX targets since not all of the big banks produce bitcoin forecasts and there are some small companies with vested interests in bitcoin growth also putting out forecasts. Still, it’s clear that bullishness around bitcoin remains in full force after a 133% year-to-date performance, making bitcoin the top sub-asset class of the year. I produced Seeking Alpha’s first analysis of the iShares Bitcoin Trust ETF (IBIT) back in January. It has grown to become the largest spot bitcoin ETF. I was neutral on IBIT back then, but turned bullish in the second quarter – that's when I bought the fund. While others have a much lower bitcoin cost basis, I see upside looking ahead to 2025 after the recent pullback from $108,000. 2025 Bitcoin Price Targets André Dragosch, PhD | Bitcoin & Macro YTD Asset Returns: Bitcoin Leads Goldman Sachs According to the issuer, IBIT seeks to reflect generally the performance of the price of bitcoin. The ETF enables investors to get exposure to bitcoin through the convenience of an exchange-traded product, helping remove the operational, tax, and custody complexities of holding bitcoin directly. IBIT has been the most traded bitcoin exchange-traded product since its launch, providing investors with potentially lower transaction costs. IBIT has grown massively from its January inception. Total assets under management is now $53 billion, with increased volume since the start of the fourth quarter. Its annual expense ratio is low at 0.12%, though BlackRock notes that after the 12-month waiver period that began on January 11, 2024, the Sponsor’s Fee will be 0.25%. Share-price momentum has been very strong this year, though there have been bouts of volatility and drawdowns that shareholders of the ETF needed to stomach. I expect more volatility next year. Of course, IBIT does not pay a dividend , but I recently pointed out that there is a liquid covered-call bitcoin ETF: the YieldMax Bitcoin Option Income Strategy ETF (YBIT) which I had a nearer-term hold rating on back when bitcoin was above $100,000 per token. IBIT is a risky ETF given its historical standard deviation trends, but liquidity is strong . Average daily volume is north of 25 million shares, while its 30-day median bid/ask spread is tight at just two basis points, per iShares. Turning to my opinions on bitcoin and why I’m optimistic about the world’s most valuable cryptocurrency, take a look at the below graph. After gold’s 2024 rally, bitcoin is just 11% of gold’s market cap. I assert that there’s a runway for bitcoin to approach gold in total value. If that were the case, then bitcoin could eventually approach the $1 million mark. That would take years, in my view, but we have seen that bitcoin rallies can be intense. Bitcoin Still A Small Asset Compared to Gold In Gold We Trust Report It’s important to be realistic about returns and volatility, though. While bull runs in bitcoin have resulted in thousands of percentage points of gains, drawdowns have typically been on the order of 70% or more. So, prospective investors must be aware of the significant downside risk that’s possible. Recognize the Risk: Bitcoin Drawdowns Have Been Intense Koyfin Charts A potential bullish catalyst in 2025 is the so-called National Bitcoin Reserve that could be put in place by President-elect Trump. As it stands, there’s an implied 58% chance that it will be created before January 1, 2026. That’s a key variable – if it’s effectively constructed, then there would likely be added demand for bitcoin. High Hopes for a Bitcoin Reserve Kalshi With a favorable regulatory backdrop given the incoming administration and a new SEC chairperson set to take over in January, let’s also analyze historical seasonal trends. January has typically been a solid month for the token. The average gain since 2011 has been 12% with a median first-month return of 5%. Fifty-seven percent of Januarys have been up. For Q1 as a whole, it’s the only quarter with positive mean returns for each of the three months. So, seasonality is generally bullish right now. Bitcoin: Bullish Q1 Seasonal Trends Barchart The Technical Take With optimism on the sellside, a still-modest value compared to gold, some bullish political catalysts in the new year, and sanguine seasonals, the technical situation is decent. Notice in the chart below that bitcoin has pulled back from its all-time high above $108,000. The rally to triple digits came on weaker RSI momentum, which was a bearish harbinger. For now, I see support in the low $90,000s and just above $85,000. If it drops below those levels, then a retest of the March 2024 highs near $74,000 could be in play. But take a look at the long-term 200-day moving average – its slope is positive, which shows that the bulls control the primary trend, Bitcoin turned extended versus the 200dma earlier this month, so I see the current pullback as healthy. Moreover, the RSI momentum gauge has not turned oversold, which is another sign that the bears have not gained a whole lot of traction. On the upside, if we take the $55,000 range from late 2021 through earlier this year, and add that on top of the $74,000 breakout point, then we arrive at a ballpark target of near $129,000. Bitcoin: Bullish Long-Term Breakout Targets $120-$130k Stockcharts.com The Bottom Line I have a buy rating on IBIT. I own the fund, and I see further upside in 2025. I encourage fellow investors and prospective investors to recognize that IBIT and bitcoin will likely be highly volatile in the next 12 months as macro news, namely concerning developments with the Trump administration, could be up and down. But with some upside catalysts next year and positive seasonals and technicals, the bullish factors outweigh the bearish risks.