Prophet model introduction

What is the Prophet model?

Prophet is an open-source time series forecasting tool developed by Facebook, based on Python and R languages. It combines traditional time series decomposition methods with machine learning algorithms, making it particularly suitable for data with trend, seasonality, and periodicity features. Due to its ease of use and efficiency, Prophet has been widely used in forecasting in financial markets. For cryptocurrencies like Bitcoin, their prices are influenced by various factors including market supply and demand, macroeconomic changes, and regulatory policies. The Prophet model models these factors based on historical data, providing a relatively reliable price forecast.

How does the Prophet model predict the price of Bitcoin?

The core of the Prophet model is to build a time series model based on historical price data, and then predict future price movements through the analysis of trends and seasonal factors. For Bitcoin’s predictions, Prophet not only takes into account price trend changes, but also incorporates factors such as Bitcoin’s halving event and the launch of ETFs into the model as external variables. These external variables can significantly affect Bitcoin’s price fluctuations, making predictions more accurate.

Key Factors Affecting Bitcoin Price

Before using the Prophet model to predict the price of Bitcoin, we need to understand the core factors that affect the price of Bitcoin. These factors will directly or indirectly affect the forecast results of the Prophet model.

Halving effect

Bitcoin’s halving mechanism is an important factor in influencing its price. The biennial Bitcoin halving event halves the block reward, reducing the amount of new Bitcoin to be added. Historically, after each halving, the price of Bitcoin tends to rise significantly over the subsequent 12 months. The upcoming Bitcoin halving event in 2024 will have a profound impact on the price action in 2025.

Participation of institutional investors

As Bitcoin gradually matures, the participation of institutional investors is also increasing. The launch of Bitcoin ETF has lowered the investment threshold, allowing more traditional investors to participate in the Bitcoin market. This trend not only promotes the inflow of funds into the market but also enhances Bitcoin’s status as a mainstream financial asset. Therefore, the continued participation of institutional investors will be an important factor in driving the rise of Bitcoin prices.

Changes in the regulatory environment

The fluctuation of Bitcoin’s price is closely related to regulatory policies. In recent years, there has been a gradual clarity on the regulatory policies of various governments regarding cryptocurrencies, especially the review of Bitcoin ETFs by the U.S. Securities and Exchange Commission (SEC). More relaxed regulations will bring new growth momentum to the Bitcoin market, which will drive prices higher.

Macroeconomic factors

Inflation, real yield and other macroeconomic factors are also important factors affecting the price of Bitcoin. In the context of increasing global economic uncertainty, Bitcoin, as a decentralized digital asset, is gradually being seen as a hedge. When traditional financial markets are impacted, investors often shift funds to inflation-resistant assets such as Bitcoin, which will directly drive up the price of Bitcoin.

The Prophet model’s prediction of Bitcoin’s price in 2025

Using the Prophet model, backtesting the BTC price data from Gate.io in the past year, it is predicted that the BTC price will be around $110,000 by the end of 2025 (there will be fluctuations according to the selected data, for reference only, no investment advice)

Industry expert opinions on the price of Bitcoin in 2025

In addition to the prediction of the Prophet model, many industry experts have also made predictions about the price of Bitcoin in 2025. Here are the views of several experts:
Standard Chartered Bank’s prediction: Geoff Kendrick, Global Head of Digital Assets at Standard Chartered Bank, predicts that Bitcoin could reach $200,000 by the end of 2025. He believes that with the push of the halving effect, the popularization of ETFs, and changes in the macroeconomic environment, the demand for Bitcoin will increase significantly, driving up prices.
VanEck’s forecast: VanEck analysts believe that the price of Bitcoin will spike to $180,000 in early 2025, followed by a potential 30% pullback. According to historical patterns, the price of Bitcoin has surged to new highs in the year following each halving event. The halving in 2024 is undoubtedly a key factor driving the price increase in 2025.
Tim Draper and Tom Lee’s predictions: Venture capitalist Tim Draper and Fundstrat co-founder Tom Lee both believe that bitcoin has the potential to break $250,000 by the end of 2025. They noted that Bitcoin’s scarcity and decentralized nature will continue to drive its price up, especially in the face of global economic instability.

Conclusion: Bitcoin’s future outlook

Through the predictions of the Prophet model and the opinions of industry experts, we can conclude that Bitcoin has strong growth potential in 2025. The halving effect, the continued participation of institutional investors, the improved regulatory environment, and macroeconomic uncertainty will all support the increase in the price of bitcoin. However, the volatility of the Bitcoin market is still high, and investors should exercise caution when making decisions and adjust their strategies based on real-time changes in the market. Whether it’s a long-term investment or a short-term trade, understanding the trends and key factors in the Bitcoin market will help investors achieve better investment returns in the future market.
As the Bitcoin market gradually matures, 2025 is likely to be an important turning point in the development of Bitcoin. Investors should closely monitor market trends, seize opportunities, and better respond to changes in Bitcoin prices.