A completely unexpected thing happened to Bitcoin (CRYPTO: BTC) in April. After a sharp decline in February and March, this cryptocurrency suddenly surged and has now risen 15% in the past 30 days.

For Bitcoin investors, the big question is whether this small price increase will last until 2025 or will fade away as the new tax levels actually start to take effect. With that in mind, here's a look at possible scenarios for Bitcoin this year.

Bullish scenario for Bitcoin

Let's start with the bullish scenario for Bitcoin. This scenario assumes that the worst tariff situation is behind us. If you believe the message from the White House, then trade agreements with India, Japan, and South Korea may happen soon. This would set the stage for some type of major reconciliation with China and a series of other trade agreements worldwide.

Once that happens, Bitcoin will likely be off to the races. Since February, Bitcoin has struggled to regain the $100,000 level. However, with growing optimism about US economic growth this year, risk-averse investors may begin to flock to cryptocurrencies, which could lead to Bitcoin skyrocketing to new all-time highs.

The two main variables here are the Bitcoin spot ETF inflows and overall investor sentiment, measured by the Crypto Fear & Greed Index. Overall, we need to see Bitcoin ETF inflows surge and the Crypto Fear & Greed Index (measured on a scale from 0-100) rise to 80 or higher, as it did after the elections.

So far, that hasn't happened. For example, the Fear & Greed Index is currently at 51, which is almost the most neutral level you can achieve.

Bearish scenario for Bitcoin

In the worst-case scenario, all talk of new trade agreements turns out to be just an illusion. Consumer confidence weakens, economic growth slows, empty shelves start to appear, prices soar, and people begin to talk about the 'R' word (recession).

In this context, Bitcoin still has bullish potential. But this only happens if investors start to lose faith in the US dollar and begin shifting their money into Bitcoin as a potential safe-haven asset. Investors have started to talk about Bitcoin as 'digital gold'.

If the economic situation deteriorates significantly, the Federal Reserve may need to intervene and lower interest rates to provide much-needed stimulus. Traditionally, lower interest rates benefit cryptocurrencies, and this could also help push Bitcoin higher.

So, even in a bearish price scenario, Bitcoin could still rise. The main variable to watch here is Bitcoin's performance compared to gold. This will be the best indicator of whether investors truly start to see Bitcoin as 'digital gold'. Theoretically, the performance gap between gold and Bitcoin will start to narrow by 2025. If gold continues to reach new record highs, then Bitcoin will also begin to hit new record highs.

Where are we in the Bitcoin cycle?

So far, I've mainly focused on macroeconomic factors and how they affect investor sentiment towards Bitcoin. But it is also important to take into account Bitcoin’s historical performance, which tends to follow a fairly predictable four-year cycle marked by boom and bust phases.

While it may be more art than science to figure out where we are in any Bitcoin cycle, conventional wisdom suggests that the starting point of any 'boom' phase is the most recent Bitcoin halving. In this case, the most recent halving took place in April 2024. Depending on who you talk to, the 'boom' phase following any halving lasts from 12 to 18 months.

So, let's do some mental calculations. If we take April 2024 as the starting date for the 'boom' phase and then assume a particularly strong boom period lasting 18 months, we will arrive at October. For the sake of argument, let's assume there's another 'Trump pump' for Bitcoin. That would take us to November.

So far, everything is fine. But do you remember what happened four years ago, in November 2021? That's right, Bitcoin reached an all-time high of $69,000 and seemed to be heading to the moon. No one thought the cryptocurrency party would end. But it did. The price of Bitcoin dropped 65% in 2022 and the term 'crypto winter' became a common term.

Is this time different?

Of course, there will be those who say, 'This time it's different.' After all, the Bitcoin spot ETF didn't exist in 2021. There was no strategic Bitcoin reserve fund in 2021. Large institutional investors were not flocking to Bitcoin like they are now. I get it. The feeling is different, especially with the Trump administration's support for cryptocurrencies.

But take the risk of ignoring history. If history is any guide, the four-year Bitcoin cycle will soon end, and it won't matter how many trade deals the White House signs or how much the Fed cuts interest rates. If you are buying Bitcoin right now, make sure you are prepared for future volatility and ready to hold for at least four years.