After setting records in 2024, many analysts believe that Bitcoin and other cryptocurrencies could see another big rise this year.
Article written by: Rafael Nam
Source: NPR
Article translation: Ada, MetaEra
Bitcoin prices have more than doubled in the past year, topping $100,000 for the first time last month. Analysts believe bitcoin and other cryptocurrencies could have another game-changing year in 2025.
To help explain why Bitcoin investors are so excited, here are three key things to pay attention to.
Will Bitcoin surge again?
Many analysts believe Bitcoin will continue to rise sharply. A recent CNBC survey showed several experts predicting Bitcoin will reach $200,000 this year.
This optimism is warranted. One important reason is that since the SEC reluctantly approved investment funds tracking Bitcoin prices early last year, Bitcoin has been becoming increasingly mainstream.
These exchange-traded funds (ETFs) are often popular with ordinary investors because they provide easier access to Bitcoin without having to spend six figures to buy a single Bitcoin.
The Bitcoin fund launched by BlackRock accumulated over $50 billion in assets last year, becoming one of the most successful ETFs in history.
Another major reason why Bitcoin investors are so optimistic is Donald Trump's return to the White House.
Will Trump deliver on his cryptocurrency promises?
During the 2024 presidential campaign, Trump made a significant promise to cryptocurrency investors: to make the U.S. the 'crypto capital of the world.'
Trump is not yet president, but he is delivering on a key aspect of his promise: choosing regulators and policymakers expected to be more friendly to cryptocurrency (including his own family, as he and his two sons are involved in cryptocurrency investments).
This would mark a significant shift for the Biden administration, which has taken a more skeptical stance on cryptocurrency.
The SEC, led by Gary Gensler, has taken aggressive enforcement actions against major cryptocurrency players like Coinbase, forcing them to comply with Wall Street laws and regulations.
But after Trump chose Paul Atkins as SEC chairman, investors hope the next market cop on Wall Street will take a markedly different approach.
Atkins is the CEO of a consulting firm with crypto clients and a former SEC commissioner, hailed as a staunch supporter of cryptocurrency.
Trump also appointed the first U.S. crypto and AI czar, renowned venture capitalist David Sacks, who is expected to help craft more friendly policies for these two sectors.
The next Trump administration will work with a Republican-controlled Congress.
Arkansas Republican Congressman French Hill is the new chairman of the House Financial Services Committee. Hill, who previously served as a community banker in his hometown, advocates for policies that help develop cryptocurrency and artificial intelligence, making him a potential powerful ally for the incoming Trump administration.
However, the more friendly legislative outlook has left many crypto experts concerned, including Sussex University professor Carol Alexander, who is known for her expertise in digital assets and successful predictions of Bitcoin prices.
Alexander is concerned that professional traders may profit at the expense of ordinary investors, likening it to a soccer match without a referee between two teams.
"We need to regulate this space," she said, referring to initiatives aimed at creating a more friendly legislative environment for the crypto industry as "a step in the wrong direction."
Will Congress launch a Bitcoin strategic reserve?
Trump made another promise to cryptocurrency investors that, if realized, could change the landscape of the industry: the U.S. will initiate a 'strategic national reserve' composed of Bitcoin.
During a cryptocurrency conference in Nashville in July, Trump stated that the government could utilize Bitcoin tokens seized from various criminals to build reserves. The U.S. reportedly holds about 200,000 Bitcoin tokens, currently valued at over $19 billion at market prices.
The cryptocurrency industry and some lawmakers hope Trump will go further and establish a Bitcoin strategic reserve. This means the government would actively buy and sell Bitcoin as one way to manage its resources.
This is similar to the government's approach of purchasing and storing strategic petroleum reserves and releasing oil during energy emergencies.
Wyoming Republican Senator Cynthia Lummis has proposed legislation to establish such a reserve. Last year, she suggested that the U.S. government purchase 200,000 Bitcoins annually over five years until it reaches 1 million, or 5% of Bitcoin's total supply.
Supporters of the strategic reserve argue that such a move would bring substantial benefits, including strategically linking the U.S. to Bitcoin's growth and giving the government an opportunity to use Bitcoin gains to pay down the nation's massive debt.
However, significant questions remain about how the U.S. could legally initiate such a Bitcoin fund, with many critics warning it could have severe consequences due to Bitcoin's known volatility, directly exposing the U.S. government to substantial losses.
Many critics also argue that establishing a U.S. strategic reserve of Bitcoin would legitimize the asset, which they believe has no practical use other than as a speculative investment.
Whether the U.S. will eventually launch such a fund remains to be seen. Meanwhile, cryptocurrency investors are ecstatic—hoping Bitcoin's golden moment will last for a while.
