Bitcoin’s 2024–2025 price action highlighted a disconnect between improving high-timeframe onchain structure and restrictive macroeconomic conditions. While crypto-native liquidity and supply dynamics strengthened during Bitcoin’s (BTC) 2024 rally, external variables, like elevated real yields and Federal Reserve balance sheet contraction, imposed valuation limits as the cycle progressed.
Key takeaways
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Bitcoin rallied to above $100,000 from $42,000 in 2024 alongside rising stablecoin inflows and sustained BTC exchange outflows.
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A key BTC valuation metric expanded to 2.2 from 1.8 in 2024-2025, but remained below overheating thresholds of 2.7.
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In 2025, elevated real yields and balance sheet contraction may have limited BTC’s returns despite a resilient onchain position.
Onchain strength underpinned the 2024 rally
Bitcoin began 2024 trading near $42,000 and advanced steadily through the year, breaking above $100,000 in Q4. This rally coincided with an improvement in onchain liquidity conditions. Monthly ERC-20 stablecoin exchange inflows averaged $38-$45 billion per month, reflecting a surplus of deployable capital within crypto markets.
At the same time, correlation analysis revealed a negative 0.32 rolling relationship between stablecoin inflows and Bitcoin exchange net flows. This indicated that liquidity entering exchanges coincided with BTC moving off exchanges.
This combination aligned with accumulation-driven rallies rather than distribution, helping the durability of Bitcoin’s 2024 uptrend. It also aligned with the spot ETF demand era and long-term institutional positioning, rather than short-term leverage-driven activity.
Valuation metrics supported this backdrop. Bitcoin’s market value to realized value (MVRV) 365-day ratio rose from 1.8 in early 2024 to around 2.2 by year-end.
On a high-timeframe basis, the data pointed to structural strength rather than speculative overheating, allowing prices to trend higher without triggering broad-based profit realization or forced selling.
However, macroeconomic conditions diverged sharply from prior bull-market environments. Throughout 2024, US 10-year real yields remained positive, averaging between 1.7% and 1.9%. Likewise, the Federal Reserve continued to drain liquidity, reducing its balance sheet from $7.6 trillion to $6.8 trillion by year-end.
This $800 billion contraction increased the opportunity cost of holding non-yielding assets such as Bitcoin. Despite these constraints, cryptonative liquidity offset tight financial conditions, allowing BTC to record a 121% gain in 2024.
Macroeconomic constraints limited outsized returns in 2025
That balance shifted in 2025. After establishing cycle highs, Bitcoin entered a period of volatility, undergoing massive price swings between $126,000 and $75,000, even as onchain structure remained broadly intact.
Stablecoin exchange inflows peaked in late 2024 and early 2025 before declining by roughly 50%, signaling a contraction in marginal buying power. Exchange netflows became more mixed but failed to support sustained rallies, suggesting supply was gradually getting distributed.
Valuation behavior reflected this regime change. MVRV 365-day SMA stabilized between roughly 1.8 and 2.2 throughout 2025, comfortably above bear-market levels, yet unable to expand further.
Statistical analysis across the 2024–2025 period also revealed that stablecoin inflows and exchange netflows collectively explained less than 6% of MVRV variation, indicating that valuation dynamics were no longer primarily driven by onchain BTC flows.
Macro conditions remained decisive. US real yields averaged from 1.6% to 2.1% in 2025, while the Federal Reserve balance sheet declined further to $6.5 trillion from approximately $6.8 trillion, removing an additional $300 billion in system liquidity.
Unlike earlier Bitcoin bull cycles, which coincided with falling real yields and expanding balance sheets, the 2025 environment remained structurally restrictive.
Related: Short-term Bitcoin traders were profitable for 66% of 2025: Will profits rise in 2026?
What this means for Bitcoin going forward
The 2024–2025 data suggested Bitcoin has entered a regime where onchain metrics define market structure, but macroeconomic variables define valuation ceilings.
Stablecoin inflows and declining exchange balances help prevent deep drawdowns, yet another bout of price discovery remains dependent on easing financial conditions.
For investors, this implied that monitoring high-time frame onchain data without a macro overlay risks incomplete conclusions. In the current cycle, Bitcoin’s next rally is more likely to be triggered by falling real yields or renewed global liquidity growth than by exchange flows alone.
Related: Did Bitcoin’s 4-year cycle break, and is the bull market really over?
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This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision. While we strive to provide accurate and timely information, Cointelegraph does not guarantee the accuracy, completeness, or reliability of any information in this article. This article may contain forward-looking statements that are subject to risks and uncertainties. Cointelegraph will not be liable for any loss or damage arising from your reliance on this information.