3 Reasons to Expect Bitcoin (BTC) to Go Even Higher in 2025

With Bitcoin (BTC 2.56%) rising by 46% during the past three months alone, it's easy to think that the king of cryptocurrencies is about to take a breather.

Despite Bitcoin's (BTC 2.56%) 46% gain over the past three months, it might not be slowing down anytime soon. Several tailwinds are converging and gaining strength, making it harder to ignore the possibility of further gains for the king of cryptocurrencies.

Here are three reasons to expect Bitcoin to continue rising in 2025, so you can invest confidently.

1. The macroeconomic stars are aligning

Cryptocurrencies tend to thrive in an environment with ample liquidity flowing through the global financial system.

In this context, you can think of liquidity as the amount of cash pressurizing the pipes of those financial systems, which include traditional financial markets in stocks as well as cryptocurrency markets.

When there's not much pressure, the smaller and more far-flung pipes -- which correspond to more speculative sectors and investments like cryptocurrencies -- simply don't get much flow from the main line. Consider this: If it's expensive or difficult for investors to acquire, deploy, or borrow capital for investment, they're going to be much more careful about where they try to park it, as the consequences of losing capital are greater. This low-pressure scenario corresponds to periods when interest rates are higher than average, constraining the actions of institutional investors with the most capital and the ability to borrow the most as well.

On the other hand, when there's so much pressure that water hydrants are bursting due to the excess, such as when interest rates are lower than average, it's a no-brainer that the most speculative corners of the system are saturated too. We aren't there yet.

Still, there is likely to be an increasing amount of liquidity in the markets in 2025 compared to the past couple of years, and that's bullish for Bitcoin. It isn't just that the Federal Reserve in the U.S. has been slashing the main interest rate recently. The European Central Bank cut rates in 2024, and is somewhat likely to cut more this year; similarly, China's central bank has signaled that rate cuts are probably in the cards for this year.

In other words, a huge swath of the world's financial industry is going to be entering a period of lower rates, juicing a new period of higher liquidity. And for Bitcoin, that's likely to be a strong catalyst for higher prices.

2. The new administration is unashamedly pro-crypto

The cryptocurrency industry hasn't been in good graces with global governments, historically speaking. Many countries, including heavyweights like China, have even banned Bitcoin at various points.

Now that is changing. In the U.S., the incoming Trump administration has spoken at length about the possibility of creating a Strategic Bitcoin Reserve (SBR).

At the same time, both the new president and vice president have disclosed substantial holdings of cryptocurrencies, and they don't discuss those holdings as though they're a vice. Six or seven years ago, this state of affairs would be nearly unthinkable.

Although the plans for an SBR are still very much in flux and it may never happen, it's worth appreciating the overt bullishness of an incoming president openly discussing the possibility of buying a huge amount of Bitcoin using public funds. This asset has obviously crossed the chasm spanning speculative investments and tried-and-tested ones, and that's why it will go higher.

3. The digital gold meme is spreading

Building on the previous point, the final reason that Bitcoin is probably going to continue to increase in value this year is that it's quickly gaining even more mindshare as so-called digital gold and shedding its past reputation as a speculative dalliance. In fact, the U.S. Treasury referenced the term in one of its presentations in late 2024; even regulators are viewing things through this lens now.

The similarities between Bitcoin and gold are hard to deny. Both require significant capital expenditure on mining equipment as well as substantial and continuous consumption of energy to produce. While it remains to be seen if the cryptocurrency actually retains its purchasing power over time in the fashion that goldbugs claim for the precious metal, the more important fact is that the meme is now widely established.

As Bitcoin's image continues to improve, it will become even more accepted as an investment, and perhaps as a medium of exchange as well. There's no way that either of those developments will be negative, to say the least.