What speaks in favor of Bitcoin in today's market?

Below is a quick overview of the most important current drivers, along with a summary of recent global market developments.

Why consider Bitcoin and crypto assets right now?

The market turbulence caused by the Trump administration's tariff measures last week continued into Monday. Although Bitcoin has fared significantly better than most other asset classes, we saw a notable drop on Sunday evening, triggered by widespread declines in Asian markets overnight (Nikkei -7.8%, HSI -13.2%). Bitcoin is currently trading around USD 79,500. So, what’s next – and why might Bitcoin be a compelling investment in the coming months and years?

Bitcoin’s historical performance in turbulent times

We can look to several historical events for indications of potential future developments. During periods such as the 2020 U.S. election turmoil, the COVID-19 outbreak, and the U.S. regional banking crisis in 2023, Bitcoin – after an initial short-term dip – outperformed both the S&P 500 and gold over a 60-day period.

This suggests that Bitcoin is increasingly establishing its role as a store of value in uncertain times, thanks to its unique characteristics: decentralized, global, digital, and with a limited supply, free from counterparty risks posed by central institutions such as banks, governments, and corporations. While there are no guarantees of a similar outcome now, Bitcoin’s recent price action, along with historical data, may offer a useful indication of what lies ahead.

Expectations of interest rate cuts from central banks

Following last week’s announcements, the likelihood of multiple rate cuts this year has increased significantly. Some analysts now anticipate up to three rate cuts from the Federal Reserve in 2025. Historically, Bitcoin has benefited from lower interest rates and would likely respond positively if central banks around the world begin easing monetary policy to stimulate the economy and avoid a recession.

Bitcoin halving

The Bitcoin halving that occurred in April 2024, combined with continued inflows into U.S.-based ETFs this year, has led to a continued reduction in the available supply of Bitcoin on global crypto exchanges. While future halvings may have a diminishing impact, current supply-demand dynamics continue to indicate potential for positive price development in 2025 and 2026.

Ongoing development of financial products in crypto

Since January, the new U.S. administration has introduced several measures that have the potential to support long-term crypto growth and greater integration of crypto assets into the traditional financial system. The U.S. Senate has proposed legislation regarding stablecoin regulation and the establishment of a national Bitcoin reserve.

The SEC has rolled back earlier regulations, now allowing U.S. financial institutions to hold crypto assets on their balance sheets. Additionally, the SEC has dropped several lawsuits against crypto entities such as Coinbase and Ripple Labs (the company behind XRP). As a result, several major players have launched regulated crypto-based products – including ETFs, leveraged ETFs, and covered call strategies.

While short-term developments remain difficult to predict, the fundamental outlook for Bitcoin and other crypto assets – such as Ethereum, XRP, and Solana – suggests continued integration into the financial system and potential for positive price performance in 2025 and 2026.

Cryptocurrency investments are associated with high risk. Virtune does not provide investment advice. Investments are made at your own risk. Securities may increase or decrease in value, and there is no guarantee that you will recover your invested capital. Please read the prospectus, KID, terms at www.virtune.com.