Currently, Bitcoin's price is hovering around $98,000, with only five days left until the new year. Here is an overview of four major economic events that could influence Bitcoin's future trajectory.
Article Author: Jamie Redman
Source: Bitcoin.com News
Article Translated by: Ada, MetaEra
With only a little time left in 2024, Bitcoin enthusiasts are eagerly discussing Bitcoin's trajectory in 2025. As this year comes to a close, many exciting things are expected next year—some may be a boon, while others could pose challenges to Bitcoin's value in fiat currency. In addition to the desire for Bitcoin trading products (ETPs) and companies like MicroStrategy hoarding Bitcoin as their assets, many external factors may stir the Bitcoin market. Therefore, keep a close eye on these four economic events in 2025.
Federal Reserve's Interest Rate Hikes and Decisions
Unless there are significant surprises, economists do not expect new stimulus measures to be introduced next year. However, discussions about coordinated rate cuts are still ongoing. Recently, after the Federal Reserve held its interest rate adjustment meeting, Fed Chair Jerome Powell told reporters that any rate cuts in 2024 are likely to be small. His cautious stance has put pressure on Bitcoin's price. According to the Chicago Mercantile Exchange (CME) FedWatch tool, the federal funds rate is likely to remain unchanged at the next Federal Open Market Committee (FOMC) meeting on January 29.
This meeting will take place just nine days after Donald Trump is inaugurated as the 47th President of the United States. CME's tool currently shows a 91.4% probability of keeping rates unchanged, with an 8.6% chance of a quarter-point rate cut. Although the Federal Reserve's decisions sometimes do not affect the market, they can influence market sentiment, as evidenced by the negative sentiment triggered by Powell's recent comments that led to a drop in Bitcoin (BTC) prices.
Trade Policies and Tariffs
The Biden administration's trade policy is relatively low-key, but many expect Trump to reinstate significant tariffs. This could impact global inflation, which is expected to decline from 5.9% in 2024 to 4.5% in 2025, with developed economies reaching their targets faster than emerging markets. On the other hand, if high tariffs are imposed, sustained inflation remains a risk that could increase costs for American consumers.
Changes in trade, inflation, and global tariffs may put pressure on Bitcoin's price, or they may drive it higher. Historically, economic uncertainty has prompted investors to turn to alternative assets like Bitcoin, which are seen as a buffer against market volatility. Nonetheless, Bitcoin's performance still depends on how trade policies, inflation trends, and regulatory developments interact with each other.
Geopolitical Risks
Geopolitical tensions, including conflicts in Ukraine and the Middle East, combined with rising global debt, are expected to challenge economic stability. These crises disrupt supply chains and stimulate rising oil prices. In response, some investors may turn to Bitcoin, which is often seen as a safe haven during uncertain times, while others who view Bitcoin as risky may sell off. Meanwhile, rising debt levels could undermine confidence in fiat currencies, further fueling interest in decentralized digital currencies.
Nevertheless, Bitcoin's value is still influenced by various factors. While military conflicts sometimes stimulate demand for Bitcoin, they can also trigger significant price drops. The interplay between these factors reflects the unpredictability of the cryptocurrency market during wars and black swan events.
U.S. Strategic Reserve Bitcoin
If Trump gains congressional support to establish a strategic Bitcoin reserve, the price of Bitcoin could soar. Many believe this represents a bold government endorsement, which would boost confidence among institutional and retail investors. The ripple effect could motivate other countries to join this trend, further increasing global demand. Additionally, if the U.S. chooses to retain the 198,109 Bitcoins seized from criminal activities, it is widely expected that these Bitcoins will continue to be locked up—more like a gold reserve rather than being sold on the open market.
A New Chapter for Leading Cryptocurrencies
As the curtain slowly falls on 2024, Bitcoin's trajectory remains intertwined with various economic impacts, political changes, and global uncertainties. While historical trends provide us with clues, a series of new factors in 2025 will write a new chapter for the leading cryptocurrency. Enthusiasts will closely watch these factors, which will not only influence Bitcoin's price movements but also reshape its overall narrative in the financial system.
The ever-changing environment surrounding Bitcoin underscores its dual identity: both as a peer-to-peer, censorship-resistant currency and as a safeguard against economic turmoil. As traditional markets struggle with policy adjustments and international tensions, Bitcoin's status within the financial system may be strengthened. In 2025, the cryptocurrency market could become a mirror of global economic growth and political pulse. It has indeed exhibited this characteristic in the second half of 2024.
