Will Bitcoin Keep Rising in 2025? Key Risks to Watch

Bitcoin has been on a wild ride, soaring past $100,000 last year and fueling hopes that 2025 will bring even more gains. Many crypto enthusiasts are still optimistic, with some even predicting that Bitcoin could skyrocket to $1 million in the future.

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The growing interest in cryptocurrency, along with increasing institutional adoption, has helped solidify Bitcoin’s place in the financial world. There’s even talk that the government might consider holding Bitcoin in reserve, which could drive demand even higher and push prices up further.

But while excitement is high, external economic factors could shake things up. A major concern for investors is whether or not the Federal Reserve will cut interest rates this year, as that could heavily influence Bitcoin’s trajectory.

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Could Interest Rates Throw Bitcoin Off Track?

Back in early 2022, the Federal Reserve aggressively hiked interest rates to fight inflation. That made things tough for riskier investments like Bitcoin, which lost 65% of its value. By comparison, the S&P 500 dropped just 19% that year.

Now, Bitcoin has been making a comeback thanks to expectations that interest rates will eventually come down. But in January, the Fed held off on rate cuts, and now experts are predicting that we might only see two or three reductions in 2025. Some even think there could be no cuts at all, especially if new tariffs are introduced on key trading partners like Canada, Mexico, and China. Higher tariffs could push up costs for consumers, leading to more inflation, which might force the Fed to keep rates high or even raise them.

If interest rates stay elevated, investors may become more cautious, shifting away from riskier bets like Bitcoin and into safer, more stable assets. Without a favorable economic climate, Bitcoin’s momentum could start to fade.

Bitcoin’s Rollercoaster Ride Continues

Bitcoin had a massive year in 2024, surging nearly 120% as optimism grew over more crypto-friendly policies from the new administration. But in 2025, things have been shakier. While Bitcoin is still up nearly 10% this year, its price has been bouncing around.

For instance, on February 3, Bitcoin dropped to just over $91,000 when fears about tariffs rattled investors. However, once news broke that tariffs on Mexico and Canada would be paused, Bitcoin bounced back above $101,000 by the end of the day. This kind of price movement highlights just how closely Bitcoin’s value is tied to economic policies and investor expectations.

If trade tensions rise or inflation remains stubbornly high, Bitcoin could be in for a rough ride. Investors should be prepared for more ups and downs in the months ahead.

What’s Next for Bitcoin in 2025?

Even though Bitcoin had an incredible run in 2024, that doesn’t guarantee smooth sailing this year. The economic outlook remains uncertain, and factors like inflation, interest rates, and trade policies could all impact Bitcoin’s price.

Whether the economy thrives, struggles, or faces new inflation concerns, Bitcoin’s performance will likely reflect those broader trends. Given all the unknowns, investors should brace for continued volatility.

For those investing in Bitcoin, it might be a smart move to balance it with safer assets to help manage risk. Diversification is key when navigating the unpredictable world of cryptocurrency, especially in 2025.

Also Read: Is Crypto a Safe Investment Amid Rising Trade Tensions?