Currently, Bitcoin's price hovers around $98,000, with only five days left until the new year. Here’s an overview of four major economic events that could influence Bitcoin's future trajectory.
Article written by: Jamie Redman
Source: Bitcoin.com News
Article translated by: Ada, MetaEra
With only a little time left in 2024, Bitcoin enthusiasts are buzzing about Bitcoin's performance in 2025. As this year comes to a close, many exciting developments are expected next year—some may be a boon, while others could pose challenges to Bitcoin's value in fiat currencies. Besides the appetite for Bitcoin Exchange-Traded Products (ETPs) and companies like MicroStrategy hoarding Bitcoin as their asset, numerous external factors could stir the Bitcoin market. Therefore, keep a close eye on these four economic events in 2025.
Federal Reserve Interest Rate Hikes and Decisions
Unless a major surprise occurs, economists do not expect new stimulus measures next year. However, discussions on coordinated rate cuts are ongoing. Recently, following a Federal Reserve interest rate adjustment meeting, Fed Chair Jerome Powell told reporters that any rate cuts in 2024 are likely to be minimal. His cautious stance has already 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.
The meeting will occur just nine days after Donald Trump takes office as the 47th president of the United States. CME's tool currently shows a 91.4% probability of maintaining the interest rate, with an 8.6% chance of a quarter-point cut. While the Fed's decisions sometimes do not impact the market, they can influence market sentiment, as evidenced by the negative sentiment triggered by Powell's latest comments, leading to a drop in Bitcoin (BTC) prices.
Trade Policies and Tariffs
The Biden administration's trade policy has been relatively low-profile, but many expect Trump to reinstate significant tariffs. This could affect global inflation, which is expected to drop 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, persistent inflation remains a risk that could increase costs for U.S. consumers.
Changes in trade, inflation, and global tariffs may pressure Bitcoin's price while potentially driving it higher. Historically, economic uncertainty has prompted investors to turn to alternative assets like Bitcoin, which are seen as buffers against market volatility. Nonetheless, Bitcoin's trajectory still depends on how trade policies, inflation trends, and regulatory developments interact.
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 generally viewed as a safe haven during uncertain times, while others who perceive Bitcoin as risky may sell off their holdings. Meanwhile, rising debt levels may 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 can sometimes stimulate demand for Bitcoin, they can also lead to significant price drops. The interplay of these factors reflects the unpredictability of the cryptocurrency market during times of war and black swan events.
U.S. Strategic Reserve Bitcoin
If Trump gains Congressional support to establish a strategic Bitcoin reserve, Bitcoin's price could skyrocket. Many believe this would signify bold government backing, boosting confidence among institutional and retail investors. The ripple effect could inspire other countries to join this trend, further increasing global demand. Moreover, if the U.S. chooses to retain the 198,109 Bitcoins seized from criminal activities, it is widely expected that these Bitcoins will remain locked up—more like a gold reserve than being sold on the open market.
A New Chapter for Leading Cryptocurrencies
As 2024 gradually comes to a close, Bitcoin's trajectory remains intertwined with various economic influences, 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 eagerly monitor these factors, which will not only impact Bitcoin's price movements but will also reshape its overall narrative within the financial system.
The ever-changing environment surrounding Bitcoin highlights 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 position within the financial system may be strengthened. In 2025, the cryptocurrency market may serve as a mirror reflecting global economic growth and political pulse. It has indeed shown this characteristic in the second half of 2024.
