Currently, bitcoin's price is comfortably hovering above $97,000, and we only have ten days left to say goodbye to the year. Here’s a summary of four significant economic events that may steer bitcoin's future.

Bitcoin enthusiasts are buzzing about what the currency will look like in 2025, with just a little time left until 2024 arrives. As we close out the year, there are many exciting things awaiting us in the coming year—some may be fortunate, while others could spell trouble for the value of BTC against fiat currency. Beyond the thirst for exchange-traded products (ETPs) and companies like Microstrategy hoarding bitcoin for their treasury, there are many external influences that could shake the bitcoin landscape. So, pay attention to these four economic events in 2025.

The Federal Reserve's decisions and interest rate hikes

Unless there are any major surprises, economists do not expect new stimulus measures in the coming year. However, discussions about coordinated interest rate cuts remain on the table. Recently, after the Federal Reserve's interest rate adjustment meeting, Fed Chair Jerome Powell told reporters that any cuts could be modest in 2024. His cautious stance has put pressure on BTC prices. According to CME's Fedwatch tool, the federal funds rate is likely to remain unchanged at the next Federal Open Market Committee (FOMC) meeting on January 29.

That meeting will occur just nine days after Donald Trump’s inauguration as the 47th president of the United States. CME's tool currently indicates a 91.4% probability of no change and an 8.6% chance of a quarter-point cut. Although the Federal Reserve's decisions sometimes do not move the markets, they can also influence sentiment, as seen last week when bitcoin's price (BTC) fell amid negative sentiment surrounding Powell's most recent comments.

Trade policy and tariffs

The Biden administration's trade policy has been relatively low-key, but many predict Trump will reintroduce tariffs with significant impacts. These could affect global inflation, expected to decline from 5.9% in 2024 to 4.5% in 2025, with advanced economies achieving targets faster than emerging markets. On the other hand, persistent inflation remains a risk if high tariffs are implemented, potentially increasing costs for American consumers.

Such changes in trade, inflation, and global tariffs could pressure or boost bitcoin's price. Historically, economic instability has driven investors toward alternative assets like BTC, seen as a buffer against market volatility. Nevertheless, bitcoin's path will depend on how trade policies, inflation trends, and legal developments intersect.

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 drive oil prices higher, pushing prices up. In response, investors sometimes turn to bitcoin, often seen as a safe haven during times of turmoil, while others regard it as a risk that may lead to selling. Meanwhile, rising debt levels could undermine confidence in fiat currencies, further encouraging interest in decentralized digital currencies.

That said, the value of bitcoin remains susceptible to many factors. While military conflicts sometimes drive demand for bitcoin, they can also lead to severe price drops. The interplay between these factors illustrates the unpredictable nature of the cryptocurrency market during wartime and Black Swan events.

The United States' strategic bitcoin reserve

If President Trump secures congressional support to create a strategic bitcoin reserve, this could cause bitcoin's price to skyrocket. Many believe this would be a bold display of government support, boosting confidence among both institutional and retail investors. The ripple effect could inspire other nations to join this trend, further driving global demand higher. Moreover, if the U.S. decides to retain the 198,109 BTC seized from criminal activities, it is widely expected that this amount will remain locked up—treated more like a gold reserve than sold on the open market.

A new chapter for the leading cryptocurrency

As the curtain falls on 2024, bitcoin's trajectory continues to be intertwined with a combination of economic influences, political changes, and global instability. While historical trends give us clues, the new combination of factors in 2025 will write a new story for this leading cryptocurrency. Enthusiasts will eagerly watch how these factors not only affect the price of bitcoin but also shape its entire narrative within financial systems.

The changing backdrop surrounding bitcoin highlights its dual life as a peer-to-peer currency, censorship-resistant, and a hedge against economic volatility. With traditional markets struggling with policy adjustments and international tensions, bitcoin's position in the financial hierarchy may strengthen or weaken. In 2025, the cryptocurrency market could act as a mirror reflecting and reacting to global economic and political pulses. This has certainly been the case in the latter half of 2024.