A crypto-friendly presidential administration supports a bullish outlook, but a correction could still be coming.
Donald Trump’s reelection as US president has sparked a rally іn bitcoin, and advocates are upbeat about 2025. However, given cryptocurrencies’ high volatility, a short but severe selloff could still be іn the cards.
Bitcoin’s value has surged roughly 125% since the beginning оf January, hovering around the $100,000 mark іn the year’s final weeks. With 2024’s big rally, the “crypto winter” оf 2021 and 2022 now seems like a distant memory. That period marked a major crisis for cryptocurrencies; the value оf bitcoin went down 75% over 12 months, sinking below $20,000.
Bitcoin’s History of Extremes
Such a turnaround is impressive, but John Plassard, senior investment specialist at Mirabaud Group, has reservations. “Bitcoin’s unprecedented rise reflects a blend of increased legitimacy and growing demand,” he explains. “But history suggests caution, as bitcoin’s price trajectory has been marked by sharp corrections following periods of exponential growth.”
Cryptocurrency prices can fluctuate significantly in short periods, induced by market sentiment and risk appetite, regulatory news, technological developments, and macroeconomic trends. Indeed, Adrian Fritz, head of research at 21Shares, says corrections are part of bitcoin’s history and price dynamic: “These downward adjustments, typically ranging from 20% to 40%, serve as a vital mechanism for reestablishing market equilibrium and are an integral part of bitcoin’s historical price patterns.”
Dovile Silenskyte, director of digital assets research at WisdomTree, agrees. “Investors should approach bitcoin with the understanding that volatility is an inherent characteristic,” she says. “This means being prepared for price corrections and potentially substantial declines in value, regardless of the current price or market conditions. Investors should also recognize that volatility can work in both directions. While it presents the possibility of substantial upside gains, it equally entails the risk of significant losses.”
Opportunities and Risks in 2025
Given their volatility, predicting cryptocurrency prices is very risky. “In 2025, bitcoin’s future looks promising yet uncertain,” says Plassard. “The growing integration of bitcoin into mainstream finance through spot ETFs and institutional adoption suggests it could consolidate its position as a legitimate asset class.”
However, bitcoin’s performance will depend on macroeconomic factors, market liquidity, and regulatory policies under the incoming Trump administration. “If the current trajectory continues, bitcoin could see further growth, though volatility and market corrections are likely to remain part of the narrative,” Plassard says.
Among the possible positive drivers for bitcoin in 2025, Silenskyte also cites persistent inflationary pressures and monetary policy uncertainty as spurring interest in bitcoin as a “store of value.”
Cheaper Money Could Head to Crypto
Fritz says that as monetary policy eases іn 2025, “increased liquidity іn the financial system could also flow into digital assets, potentially driving up demand for bitcoin.” He counters by highlighting that escalating geopolitical conflicts, particularly іn the Middle East, could significantly dampen investor appetite for high-risk assets. “The resulting economic uncertainty and market instability often push investors toward safer, more traditional assets, potentially triggering a selloff,” he explains.
Fritz also warns that any pro-cryptocurrency policies from the White House could be implemented more slowly than expected. This “could lead to market disappointment and a price correction, as many investors bet the Trump administration will turn the tide of cryptocurrency processing in the United States.”
Trump Pushes Pro-Crypto Regulation
The Trump administration is expected to play a significant role, as bitcoin enthusiasts anticipate much more favorable regulation toward cryptocurrencies. Trump has promised to make the US the new “bitcoin hub,” and he’s offering leadership roles in the Department of Commerce, the Treasury, and more to figures who are seen as very supportive of the crypto industry. Gary Gensler, current chairman of the Securities and Exchange Commission—historically averse to the crypto world and a proponent of much stricter regulation—will step down on Jan. 20, 2025. Trump has nominated Paul Atkins, who has advocated cryptocurrencies for years, to replace him.
There are concrete plans for establishing advisory councils specializing in digital assets and appointing a “crypto czar” tasked with advising and regulating the industry. Ripple CEO Brad Garlinghouse is being discussed for this role. “These moves suggest a possible streamlining of regulatory processes and greater integration of digital assets into traditional financial systems, potentially fostering innovation and growth,” Fritz comments.
Bitcoin as an Asset
Bitcoin has evolved into a full-fledged financial asset class over the last few years. Its market capitalization of $2.03 trillion places it among the world’s largest assets, and the approval of spot ETFs in the US in January 2024 has bridged the gap between crypto and traditional finance.
“These instruments will continue to contribute to increased demand in the US as more private banks, hedge funds, and government pension funds add bitcoin to their portfolios, as evidenced by the SEC’s 13F filings over the past three quarters,” Fritz says.
Plassard adds that major asset managers such as BlackRock BLK and Fidelity FNF entering the space have “further legitimized bitcoin as a portfolio asset.”
Silenskyte says institutional investors increasingly recognize the value of allocating a small percentage of their multi-asset portfolios to bitcoin. Conversations with institutional investors are evolving:
“More and more are beginning to recognize that no allocation in bitcoin represents an active underweighting, rather than a neutral position.”
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