Just when some had begun to think that the latest crypto hype was finally behind us, the past year has seen digital assets grow even more popular as Bitcoin's bid to become a store of value appears increasingly likely. December 2024 brought Bitcoin's first ascent above the key psychological level of $100,000. Many believed it would never happen back during the first big bubble of 2017, but here we are, six months into a post-$100K BTC world, and investors are naturally beginning to fix their sights on even higher milestones.
Recent nuclear tensions between Iran and Israel did lead to a dip from a local peak above $111,000 down to within touching distance of its $100,000 support, but prices have now stabilised in the middle of this range at around $106,541 on 25 June following the announcement of a ceasefire and a potential reopening of negotiations. However, between a changing regulatory landscape and more nuanced investor profile in the US and a likely impending shift in monetary policy, there are numerous factors that will surely play a part in the trajectory of Bitcoin and the wider cryptocurrency space throughout the remainder of 2025 and beyond.
Worlds apart
As any observer will have noticed, global geopolitical relations have become increasingly strained in recent months, with the tensions in the Middle East at a new head. Despite the fear associated with regional war and the higher energy costs this would entail, Bitcoin has managed not only to maintain its now two-year bull trend, but it has even gone on to hit a new all-time high during this time. Despite first behaving more like a store-of-value asset similar to gold, it has also surprisingly exhibited much greater correlation with US stocks than ever before. This trend has coincided with growing adoption across a variety of segments of the population, but especially among older, more traditional investors, and institutional clients and funds.
The catalyst for this shift was undoubtedly the introduction of spot ETFs in early January this year, which now hold 6.6% (1.39 million) of all the bitcoins in supply. BTC's robust returns over this period have inspired a new wave of institutional adoption, too, which has seen corporate Bitcoin holding companies nearly double since 5 June. According to BitcoinTreasuries.NET, over 244 companies now hold Bitcoin on their balance sheets, up from just 124 weeks ago. What's more, retail investors are also increasing their crypto exposure, with 58% rebalancing their portfolios toward digital assets. And amid a rising trend towards more adoption, the Bitcoin market should enjoy sustained liquidity for the foreseeable future, while BTC's inherent deflationary mechanism will also support higher prices over time.
Beyond the market
Just like any other bona fide asset class, cryptocurrencies are also beholden to the economic situation and policies in the world's biggest economy, the United States. Inflation in the US remains defiantly high, with the consumer price index increasing 0.1% in May for an annualised inflation rate of 2.4%. For a non-inflationary asset like Bitcoin, this likely means higher prices over time. This comes as a potential cut to persistently high interest rates has also made it onto the agenda following public attention on the matter from President Donald Trump, who has been calling for a rate cut since April.
The dovish commentary from Federal Reserve Chair Jerome Powell, in which he reinforced the possibility of rate adjustments provided that inflation softens and successful trade deals are forthcoming, has caused investors to perceive these comments as a sign of the Fed's willingness to cut rates before the end of the year. The CME's FedWatch tool now places the likelihood of a cut of at least 25 basis points at over 90%. What's more, Republican senators on Tuesday, 24 June 24, unveiled a set of principles to serve as a framework for developing legislation for digital assets, specifically defining when crypto is a commodity or a security, allowing crypto exchanges to register with the Commodity Futures Trading Commission and reducing the Securities and Exchange Commission's regulation of digital assets. This is a huge step away from the close regulation proposed by Joe Biden, and it could encourage investors to bet long term on Bitcoin as a free-flowing and less heavily scrutinised investment vehicle.
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