Bitcoin’s 2024-2025 price action highlighted the disconnect between high periods of on-chain structural improvement and restrictive macroeconomic conditions. While the cryptocurrency’s inherent liquidity and supply dynamics have strengthened during Bitcoin’s (BTC) 2024 rally, external variables such as rising real yields and shrinking Federal Reserve balance sheets have put valuation caps in place as the cycle progresses.
Key Takeaways
Bitcoin rose from $42,000 to over $100,000 in 2024, coupled with increased stablecoin inflows and continued BTC exchange outflows.
The key BTC valuation indicator expanded from 1.8 to 2.2 in 2024-2025, but remained below the overheating threshold of 2.7.
In 2025, rising real yields and shrinking balance sheets may limit BTC’s returns despite its resilient on-chain position.
On-Chain Strength Underpins 2024 Rally
Bitcoin began 2024 trading near $42,000 and rose steadily throughout the year, surpassing $100,000 in the fourth quarter. This rally coincided with an improvement in on-chain liquidity conditions. Monthly ERC-20 stablecoin exchange inflows averaged $38 to $45 billion per month, reflecting the glut of deployable capital within the cryptocurrency market.
At the same time, correlation analysis shows a negative 0.32 rolling relationship between stablecoin inflows and Bitcoin exchange net flows. This indicates that liquidity flowing into the exchange is consistent with BTC leaving the exchange.
This combination coincides with an accumulation-driven rally rather than distribution, helping the durability of Bitcoin’s 2024 uptrend. It also aligned with the era of spot ETF demand and long-term institutional positioning rather than short-term leverage-driven activities.
Evaluation indicators supported this background. Bitcoin’s 365-day market value-to-realized value (MVRV) ratio increased from 1.8 in early 2024 to around 2.2 by the end of the year.
Over the longer term, the data points to structural strength rather than speculative overheating, allowing prices to maintain an upward trend without triggering widespread profit-taking or forced selling.
However, the macroeconomic situation was significantly different from previous bull market environments. Throughout 2024, U.S. 10-year real yields remained positive, averaging 1.7% to 1.9%. Likewise, the Federal Reserve continued to drain liquidity, shrinking its balance sheet from $7.6 trillion to $6.8 trillion by the end of the year.
This $800 billion contraction has increased the opportunity cost of holding unprofitable assets like Bitcoin. Despite these constraints, cryptocurrency liquidity offset tight financial conditions, allowing BTC to post a 121% gain in 2024.
Macroeconomic constraints limit large-scale returns in 2025.
That balance shifted in 2025. After achieving its peak cycle, Bitcoin entered a period of volatility, with massive price swings between $126,000 and $75,000, even though its on-chain structure remained largely intact.
Stablecoin exchange inflows peaked in late 2024 and early 2025 and then declined by approximately 50%, indicating a decline in marginal purchasing power. Exchange netflows were more mixed but failed to support a sustained rise, suggesting supply is gradually becoming more dispersed.
Evaluation practices reflected these institutional changes. MVRV 365-day SMA has stabilized between approximately 1.8 and 2.2 throughout 2025, comfortably above bear market levels but unable to extend further.
Statistical analysis over the 2024-2025 period also shows that stablecoin inflows and exchange netflow collectively explain less than 6% of the variation in MVRV. This indicates that valuation dynamics are no longer primarily driven by on-chain BTC flows.
Macro conditions remained decisive. In 2025, U.S. real yields increased from an average of 1.6% to 2.1%, while the Fed’s balance sheet declined further, from about $6.8 trillion to $6.5 trillion, removing an additional $300 billion from system liquidity.
Unlike the initial Bitcoin bull cycle, which coincided with falling real yields and expanding balance sheets, the 2025 environment was structurally constrained.
Related: Short-Term Bitcoin Traders Profit 66% of the Year in 2025 Will revenues increase in 2026?
What this means for the future of Bitcoin
The 2024-2025 data suggests that Bitcoin has entered a regime where on-chain indicators define the market structure, but macroeconomic variables define the value ceiling.
Stablecoin inflows and declining exchange balances will help prevent a significant decline, but further price discovery will depend on easing financial conditions.
For investors, this means that monitoring on-chain data at high time frames without a macro overlay risks producing incomplete conclusions. Bitcoin’s next rally in the current cycle is more likely to be triggered by falling real yields or increased global liquidity than by exchange flows alone.
Related: Is Bitcoin’s Four-Year Cycle Broken? Is the bull market really over?
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This article does not contain investment advice or recommendations. All investment and trading activities involve risk and readers should conduct their own research when making any decisions. While Cointelegraph strives to provide accurate and timely information, Cointelegraph does not guarantee the accuracy, completeness or reliability of the information contained in this article. This article may contain forward-looking statements that involve risks and uncertainties. Cointelegraph will not be liable for any loss or damage arising from your reliance on this information.