Bitcoin's price performance in 2024-2025 highlighted a disconnect between improving high-time frame on-chain structure and restrictive macroeconomic conditions. While crypto-native liquidity and provide dynamics strengthened during Bitcoin's (BTC) rally in 2024, external variables equivalent to increased real yields and the Federal Reserve's balance sheet contraction created valuation limits because the cycle progressed.
Key insights
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Bitcoin rose from $42,000 in 2024 to over $100,000, accompanied by rising stablecoin inflows and continued BTC exchange outflows.
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A key BTC valuation metric increased from 1.8 to 2.2 in 2024-2025, but remained below the overheating threshold of two.7.
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In 2025, increased real yields and balance sheet contraction can have limited BTC's returns despite a sturdy on-chain position.
Onchain strength underpinned the rally in 2024
Bitcoin trading began 2024 at around $42,000 and rose steadily all year long until it broke $100,000 within the fourth quarter. This rally coincided with improving on-chain liquidity conditions. Monthly inflows to ERC-20 stablecoin exchanges averaged $38 billion to $45 billion monthly, reflecting an excess of deployable capital in crypto markets.
At the identical time, correlation evaluation revealed a negative rolling relationship of 0.32 between stablecoin inflows and Bitcoin exchange net flows. This suggested that the liquidity entering exchanges coincided with the exodus of BTC from exchanges.
This combination was biased toward accumulation-driven rallies relatively than distribution, contributing to the sturdiness of Bitcoin's uptrend in 2024. It also coincided with the era of spot ETF demand and long-term institutional positioning, relatively than short-term, leverage-driven activity.
The Bitcoin MVRV ratio is below the 365-day moving average. Source: CryptoQuant
Valuation metrics supported this background. Bitcoin's 365-day market value to realized value (MVRV) ratio rose from 1.8 firstly of 2024 to around 2.2 at the top of the yr.
On a long-term basis, the information suggests structural strength relatively than speculative overheating, allowing prices to trend higher without widespread profit realization or forced selling.
Bitcoin price, on-chain data and macroeconomic background (2024-2025). Source: CryptoQuant/FRED/Cointelegraph
However, macroeconomic conditions were significantly different from previous bull market environments. Throughout 2024, real 10-year U.S. Treasury yields remained positive, averaging between 1.7% and 1.9%. Likewise, the Federal Reserve continued to withdraw liquidity, reducing its balance sheet from $7.6 trillion to $6.8 trillion by year-end.
This $800 billion drop increased the chance cost of holding non-profitable assets like Bitcoin. Despite these constraints, crypto-native liquidity was capable of offset tight financial conditions, allowing BTC to post a 121% gain in 2024.
Macroeconomic constraints limited above-average returns in 2025
This balance shifted in 2025. After reaching highs, the Bitcoin cycle entered a period of volatility and experienced massive price swings between $126,000 and $75,000, although the on-chain structure remained largely intact.
Inflows to stablecoin exchanges peaked in late 2024 and early 2025 before declining by around 50%, indicating a decline in marginal purchasing power. Net inflows on exchanges became more mixed but didn’t support sustained rallies, suggesting that offer was step by step being distributed.
Liquidity vs. Valuation: What Worked and What Didn't (2024-2025). Source: Cointelegraph
Valuation behavior reflected this regime change. MVRV's 365-day SMA stabilized between around 1.8 and a pair of.2 throughout 2025, well above bear market levels, but didn’t grow further.
Statistical evaluation over the 2024-2025 period also found that stablecoin inflows and exchange net flows together explained lower than 6% of MVRV variation, suggesting that valuation dynamics were now not primarily driven by on-chain BTC flows.
Federal Reserve Balance Sheet 2024-2025. Source: FRED
Macroeconomic conditions remained crucial. U.S. real yields averaged from 1.6% to 2.1% in 2025, while the Federal Reserve's balance sheet continued to say no from about $6.8 trillion to $6.5 trillion, losing an extra $300 billion in system liquidity.
Unlike previous Bitcoin bull cycles that saw falling real yields and expanding balance sheets, the environment in 2025 remained structurally restrictive.
What this implies for the longer term of Bitcoin
The 2024-2025 data suggests that Bitcoin has entered a system where on-chain metrics define market structure but macroeconomic variables define valuation caps.
Stablecoin inflows and declining FX balances are helping to forestall sharp declines, but further price discovery stays depending on easing financial conditions.
For investors, this meant that monitoring high-timeframe on-chain data with out a macro overlay carried the chance of incomplete conclusions. In the present cycle, Bitcoin's next rally is more more likely to be triggered by falling real yields or renewed global liquidity growth, relatively than FX flows alone.
This article doesn’t contain any investment advice or recommendations. Every investment and trading activity involves risks and readers should conduct their very own research when making their decision. While we try to supply accurate and up-to-date information, Cointelegraph doesn’t guarantee the accuracy, completeness or reliability of the data in this text. This article may contain forward-looking statements which might be subject to risks and uncertainties. Cointelegraph is not going to be accountable for any loss or damage arising out of your reliance on this information.
This article doesn’t contain any investment advice or recommendations. Every investment and trading activity involves risks and readers should conduct their very own research when making their decision. While we try to supply accurate and up-to-date information, Cointelegraph doesn’t guarantee the accuracy, completeness or reliability of the data in this text. This article may contain forward-looking statements which might be subject to risks and uncertainties. Cointelegraph is not going to be accountable for any loss or damage arising out of your reliance on this information.
