Will bitcoin crash in 2025?

Welcome to the Canadian Crypto Observer. Financial journalist and author Aditya Nain offers perspective on market-moving headlines to help Canadian investors navigate the cryptocurrency market.

It’s 2025 and bitcoin is (still not) dead

Something peculiar but important happened in 2024: bitcoin was pronounced dead just twice, compared to 124 times in 2017!

Why does that matter? Here’s some context:

Bitcoin turned 16 years old on Jan. 3, 2025. On that date in 2009, Satoshi Nakamoto (the mysterious and elusive creator of bitcoin) created the first bitcoins by mining the first block on the bitcoin blockchain—known as the “genesis block.” In those 16 years, 477 articles published around the globe—including in The New York Times, Financial Times, The Guardian and The Atlantic—declared bitcoin to be dead. However, it’s not a fringe asset anymore. Since 2017, the number of “bitcoin in dead” articles published has gradually decreased to almost none.

_{Source: Data gathered from 99bitcoins.com (as of Jan. 9, 2025)}

This quirky data point, coupled with increased institutional crypto adoption by financial powerhouses like Blackrock and Fidelity, shows that, as of 2025, bitcoin is a resilient financial technology and a promising investment asset class.

Will crypto crash in 2025?

Bitcoin isn’t dead—but, having hit the USD$100,000 mark in early December 2024, is it a bubble? Will it crash in 2025? Or will the bull run continue?

Nobody knows for certain what the next 12 months hold, but as covered in my previous column, “Where is bitcoin headed in 2025?”, crypto-positive experts believe bitcoin’s strong long-term upward trend remains intact. Among those willing to stick their neck out with a prediction is the popular and well-respected Wall Street analyst Tom Lee—who sees bitcoin possibly touching USD$250,000 in 2025.

Despite long-term optimism, there are short-term headwinds, such as possible Trump tariffs leading to inflationary pressures. This, coupled with strong U.S. economic data—like the robust jobs report published on Jan. 10—increases the likelihood of a pause in interest rate cuts by the U.S. Federal Reserve (Fed). Tight monetary policy is typically bearish for bitcoin. 

What happens when bitcoin halves?

Whether or not bitcoin’s bull run continues, 2025 is an important year for bitcoin and crypto investors. Here’s why:

Every four years, bitcoin goes through what’s called a “halving.” That’s when the number of coins mined per block decreases by 50%. In effect, the rate at which new coins are added into circulation is cut in half. This is bullish for investors because—as per the bitcoin algorithm’s built-in rules—there will only ever be 21 million bitcoins. So, as long as the demand for bitcoin remains strong, if the rate at which new coins are created is reduced, the price will trend upwards. The most recent halving event was in April 2024, and the next will be mid-2028.

Below is a snapshot of where bitcoin mining stands right now:

But what does the halving have to do with bitcoin prices, and why does it matter this year? Historically, in each crypto market cycle, bitcoin and broader crypto prices have peaked in November or December of the year following the halving—that’s 2025. Details are in the table below:

So, will bitcoin and crypto prices keep rising in 2025? Or did we already see the peak at $108,000 in December 2024? That remains to be seen.

Best ways to buy crypto in Canada in 2025

As a Canadian investor, if you’ve missed out on the crypto boom so far, you may be wondering if there’s still an opportunity to enter this market. On the other hand, if you’re already a crypto investor, you may be wondering how to optimize your portfolio—including from a tax perspective. 

These are the various ways in which Canadian investors can buy and hold crypto in 2025:

• Buy crypto directly: Buy bitcoin, ethereum, solana and other coins from a crypto exchange. Here’s my guide to the best crypto platforms and apps in Canada. Once you buy the coins, you can continue to hold them on the platform itself or move them out to a crypto wallet.
  
• Invest in crypto exchange-traded funds (ETFs): Canadian investors can choose between two types of crypto ETFs: those that hold only crypto (either bitcoin or a combo of bitcoin and ethereum) and those that hold a small amount of crypto in a diversified portfolio along with other assets like stocks and bonds. Here’s my guide to crypto ETFs in Canada.
  
• Buy crypto stocks: As of Jan. 8, 2025, there are several publicly traded companies listed on Canadian stock exchanges whose core business is crypto—including mining, staking, fintech, payments, exchanges and infrastructure. These include Galaxy Digital Holdings Ltd. (GLXY), Hut 8 Corp. (HUT), Bitfarms Ltd. (BITF), Hive Digital Technologies Ltd. (HIVE) and WonderFi Technologies Inc. (WNDR). Additionally, you could buy U.S.-based crypto stocks such as Coinbase Global Inc. (COIN), which trades on the Nasdaq.

My preferred mode of buying crypto in Canada is via ETFs, for two reasons: 

1. Crypto ETFs hold actual crypto, so they’re a more direct way to gain exposure to crypto compared to shares in a public company engaged in crypto activities.
2. Crypto ETFs are eligible for tax-advantaged accounts like the tax-free savings account (TFSA), registered retirement savings plan (RRSP) and first home savings account (FHSA). (More on crypto and taxes below.)

It’s tax season—here’s what you need to know

The Canada Revenue Agency (CRA) considers cryptocurrencies as commodities, the purchase and sale of which can result in a capital gain or loss. As a result, if you sold crypto in 2024, you may either owe capital gains tax or have a capital loss that you can use to offset other capital gains.

Here’s how capital gains tax works in Canada, including for crypto: 50% of the capital gain is added to your income and taxed at your marginal tax rate. Read MoneySense’s guide to crypto taxes in Canada, and my article about crypto ETF taxes in Canada.

Here’s an example: Let’s say you bought 1 bitcoin for $62,722 on Jan 8, 2024, and sold it for $144,733 on Dec. 14, 2024. You’d owe $12,301.65 in capital gains tax. Here’s the calculation:

Trudeau resigns—leading to capital gains tax uncertainty

Calculating your capital gains tax could be pretty straightforward as long as you have records of all your transactions. However, if you have over $250,000 in capital gains, things may get more complicated.

If your capital gains are over $250,000, your inclusion rate for the gains above $250,000 could be two-thirds (66.67%). Although this higher rate was introduced in 2024, there remains uncertainty on whether and how it will be implemented in 2025 and beyond. 

Why? The capital gains tax changes had not yet passed into law when Prime Minister Justin Trudeau announced his resignation and prorogued Parliament until March. However, the Finance Department has stated that during prorogation, the CRA will continue to administer the changes. Here’s what we know so far about capital gains tax changes during prorogation. 

Crypto price swings are common

The prices of bitcoin, ethereum and other cryptocurrencies are speculative and subject to extreme swings. While the long-term trend for crypto looks strong, investors should keep in mind that deep and sudden bear markets are part of crypto’s history—and should be expected in the future. 

As always, exercise caution and only consider crypto if it aligns with your financial goals, time horizon and risk profile. Invest only as much money as you’re willing to lose, and keep a lookout for crypto scams.

More about crypto:

• Bitcoin tops USD$100,000 for the first time
• Price of bitcoin hits new high after Trump victory, and more crypto news
• Mission digital: How Coinbase is reshaping Canada’s crypto landscape
• How to protect your crypto from hacks

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