Bitcoin prices could soar to $160,000 by 2025 thanks to improving macroeconomic conditions and loose global monetary policy, according to a report from cryptocurrency service provider Matrixport.
Bitcoin (BTC) surpassed the $100,000 mark for the first time on December 6, marking a long-awaited milestone in the cryptocurrency space.
In a positive signal for Bitcoin prices, the European Central Bank (ECB) cut interest rates by an additional 25 basis points to 3% on December 12, aiming to boost investment and economic activity in the region.
The People's Bank of China (PBoC) also decided to cut the one-year loan interest rate by 40 basis points to 5.6% on November 21. This is the first time the bank has lowered rates in over two years amid a weakening economy.
Jag Kooner, head of derivatives at Bitfinex, noted that the global trend of interest rate cuts could drive investors to shift towards risk assets such as Bitcoin:
“This double easing could drive capital flows into risk markets, including cryptocurrencies. Coupled with traditional December optimism, this could create a ‘Santa Claus rally’, pushing the prices of Bitcoin and other cryptocurrencies higher as investors allocate more capital to this sector.”
BTC/USDT weekly chart | Source: TradingView
However, the upcoming monetary policy decision by the Federal Reserve on December 18 could significantly impact Bitcoin prices from now until the end of 2024.
According to a report shared by Matrixport on X (formerly Twitter) on December 13, this momentum could help Bitcoin prices exceed $160,000 by 2025. Matrixport stated:
“Our forecasts indicate that Bitcoin could reach $160,000 by 2025, equivalent to a more than 60% increase. This target aligns with steady demand for Bitcoin ETFs, developments in the macroeconomic environment, and the expansion of global liquidity.”
The cryptocurrency market is ready for the next growth phase – Bitfinex
Bitcoin investors are eagerly awaiting the final decision on the Fed's monetary policy for 2024 on December 18.
According to the latest data from the CME FedWatch tool, the probability of the Fed cutting rates by an additional 25 basis points currently stands at 96.7%, up from 82.5% a month ago.
Predicted interest rate cuts | Source: CME FedWatch tool
Jag Kooner stated that the Fed's interest rate cut could help Bitcoin end the year at a ‘record high’. He commented:
“Lower interest rates usually reduce borrowing costs, encouraging investors to take on more risk. Cryptocurrencies, which are high-risk assets, often attract capital flows during such periods of increased liquidity. Additionally, positive sentiment from loose monetary policy can improve investor confidence.”
Bitcoin prices are expected to continue rising after the market witnessed a $1.7 billion reduction in leveraged trading positions on December 9. Kooner explained that this deleveraging creates a foundation for the next price rally of Bitcoin, he said:
“Overleveraged positions have been cleared, creating a foundation for the next growth phase for Bitcoin.”
In cryptocurrency trading, leverage refers to the borrowed funds that an investor uses to increase the size of their trading positions.
Previously, on November 12, Kris Marszalek, co-founder and CEO of Crypto.com, warned that the cryptocurrency market needed to undergo a deleveraging process before Bitcoin could surpass the $100,000 threshold — nearly a month before BTC first reached six-figure prices.
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