The first quarter of 2025 could be a decisive turning point for Bitcoin. The US Federal Reserve’s (FED) expansionary monetary policies and the uncertainty surrounding the new Trump administration’s cryptocurrency regulations are among the most important factors that will affect Bitcoin’s price action.
Fed’s $612 Billion Liquidity Provision Could Support Bitcoin
BitMEX co-founder Arthur Hayes stated that the $612 billion in additional liquidity provided by the US Treasury in the first quarter of 2025 has the potential to offset uncertainties regarding cryptocurrency regulations. Hayes made the following assessment in his blog post on January 7:
“The Trump administration’s pro-crypto and pro-business policies not meeting expectations could be offset by a positive dollar liquidity environment. I expect a $612 billion increase in Q1.”
The Trump Administration’s Impact on Markets
Donald Trump’s inauguration on January 20 is generally considered a positive development for the crypto industry. However, possible delays in regulation could have a negative impact on investor psychology. Hayes stated that this situation could lead to sudden sell-offs in the market and added:
“Markets will have to face the reality that Trump will not be able to make any significant policy changes until January 2026 at best. This realization could cause a sharp sell-off in crypto and other assets Trump supports.”
Long-Term Bitcoin Prospects Positive
Despite potential regulatory disappointments for cryptocurrencies, analysts remain optimistic about Bitcoin’s long-term performance, with some predicting that a $20 trillion increase in global money supply could lead to around $2 trillion in investment in Bitcoin, potentially leading to a peak above $150,000 by the end of 2025.