As 2024 draws to a close, the Bitcoin enthusiast community is abuzz with speculation about the future of this currency in 2025. With only a few days left in 2024, many notable events are approaching, which could present opportunities but also pose significant challenges to Bitcoin's value compared to fiat money. Alongside the increasing demand for ETP products and companies like MicroStrategy continuing to accumulate Bitcoin as a reserve asset, there are many external factors that could change the Bitcoin landscape.

1. Federal Reserve's interest rate decisions

Unless there are any unexpected changes, economists do not expect new stimulus measures in the coming year.

However, discussions about coordinated interest rate cuts are still being considered. Recently, after the Federal Reserve's interest rate meeting, Fed Chairman Jerome Powell announced that if there are interest rate cuts, the reduction may be modest in 2024. His cautious stance has put pressure on Bitcoin (BTC) prices. According to CME's Fedwatch tool, the federal funds rate is likely to remain unchanged at the next meeting of the Federal Open Market Committee (FOMC) on January 29.

The meeting will take place just nine days after Donald Trump's inauguration as the 47th President of the United States. The current CME tool shows a 91.4% probability for no change in interest rates, while the likelihood of a 0.25 percentage point cut is 8.6%. Although Federal Reserve decisions sometimes do not have a significant impact on the market, they can influence market sentiment, as seen last week when Bitcoin prices fell in response to Powell's recent negative comments.

2. Trade policies and tariffs

The current trade policies of the Biden administration are relatively cautious; however, many predict that once Trump returns as the 47th President of the United States, he may reapply strong tariff policies, which could have significant impacts on the global economy.

These changes could affect the level of inflation, which is expected to decrease from 5.9% in 2024 to 4.5% in 2025. However, developed economies may achieve their inflation reduction targets faster than emerging markets. Nevertheless, if tariffs continue to be maintained, inflation may remain high, which will increase consumer costs in the U.S.

Fluctuations in trade, inflation, and tariffs can have significant impacts on the value of Bitcoin. Historically, economic instability often drives investors to seek alternative assets like Bitcoin, seen as a 'safe haven' during turbulent market periods. However, Bitcoin's path will depend on how trade policies, inflation trends, and legal changes interact with each other.

3. Geopolitical risks

Geopolitical tensions, particularly the conflict in Ukraine and the situation in the Middle East, combined with rising global public debt, may continue to pose significant challenges to the global economy. These crises disrupt supply chains, driving up oil prices and many other goods, thereby impacting the global economy. In response, some investors may turn to Bitcoin, viewing it as a 'safe haven' during times of instability. However, many investors also see Bitcoin as a risky asset and will sell in times of unrest.

Additionally, the rise in public debt may undermine confidence in fiat currencies, driving interest in decentralized currencies like Bitcoin. However, Bitcoin's volatility may still be affected by many unpredictable factors, especially in the context of military crises or unexpected events, such as black swans.

4. The impact of other factors

In addition to the three factors above, other events such as technological advancements, changes in investment trends, and new legal regulations will also significantly impact the Bitcoin market. While some factors may boost Bitcoin's value, such as broader acceptance by financial institutions, changes in legal frameworks or tighter regulations could create significant barriers to the development of this currency.

Conclusion

The future of Bitcoin in 2025 will be influenced by various economic, political, and social factors. While fluctuations such as rising interest rates, tariff policies, and geopolitical tensions can strongly affect Bitcoin's value, the crypto market remains notably volatile and unpredictable. This requires investors to be cautious and closely monitor economic developments in the near future.

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