The Greatest Risk to Bitcoin’s Bull Market in 2025 | Matrixport Research

Several potential threats emerged that could disrupt the current Bitcoin bull market. One notable concern comes from BlackRock, which stated there is “no guarantee” that Bitcoin’s 21 million coin supply cap will remain unchanged due to its decentralized protocol. This statement has sparked discussion, but it should be viewed in context.

Recent advancements, such as Google’s announcement of their “Willow” quantum chip with 105 qubits, have reignited discussions about the potential long-term threat quantum computing poses to Bitcoin’s security. While the technology remains in its infancy, lacking the scale and stability to directly compromise Bitcoin’s cryptographic defences, the theoretical risks warrant attention.

Fed members have recently raised their inflation expectations. This shift is driven less by factors like stronger economic growth or supply bottlenecks, prominent during the COVID crisis, and more by political considerations. Specifically, concerns over Trump’s potential tariffs — widely regarded by economists as inflationary — seem to influence their outlook. Yet, during Trump’s first term, such tariffs had minimal impact on inflation. This suggests that the Fed’s inflation projections may not fully align with the current economic realities, which could create room for policy flexibility in the coming year.

Our inflation model, which underpinned our contrarian bullish view for 2023 — when most Wall Street economists were forecasting a recession — was instrumental in predicting the start of the current Bitcoin bull market. According to our model, inflation should not present a major issue next year, likely allowing the Fed to maintain a dovish stance.

Historically, Bitcoin bull markets have often peaked when regulatory pressure reached a tipping point. For instance, in January 2014, China’s PBoC prohibited banks from dealing with crypto firms; in December 2017, the U.S. SEC initiated enforcement actions against crypto firms for unregistered capital raisings; and in May 2021, China’s State Council intensified its crackdown by restricting crypto mining and trading.

With much of this regulatory overhang seemingly resolved — highlighted by the SEC’s approval of Bitcoin Spot ETFs — the risk of this Bitcoin bull market ending likely hinges on other factors.

While the move away from near-zero interest rates was a significant shift in December 2021, more recently, the Fed had signalled its intent to lower rates for over a year before implementing its first cuts in September 2024.

However, as we cautioned then, the FOMC could adopt a more hawkish stance if a Trump presidency seemed increasingly likely or was confirmed — both of which have now come to pass. This scenario introduces new uncertainties for Bitcoin and the wider crypto market, as the Fed’s response to potential fiscal policies under Trump could shape the trajectory of monetary policy.

Disclaimer: The above content is for informational purposes and reference only. The content does not constitute investment advice. Digital asset transactions can be precarious and volatile. Investment decisions should be made after carefully considering individual circumstances and consulting financial professionals. Matrixport is not responsible for any investment decisions based on the information provided in this content.

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