Bitcoin has had a volatile few months. Yet its price continues a long-term upward trend. We discuss the current factors impacting its development.
Rises
and dips in the price of Bitcoin have always been par for the course. Yet in
the last few months, the cryptocurrency has been on a rollercoaster of a
journey. As it becomes more accepted in traditional financial settings, this
will only increase. So what are the major factors impacting the Bitcoin price
at this current moment in time?
MicroStrategy continues its commitment to Bitcoin
MicroStrategy,
the largest corporate holder of Bitcoin, made a number of commitments to
Bitcoin this week. Firstly, it announced a name change, rebranding itself as
Strategy. After a period where it announced it had not bought any more Bitcoin,
itself following a large spending spree, it has now announced its continued
commitment to the currency. Strategy also announced that between 2025 and 2027,
it plans to give out around $42 billion in securities.
Its
name change, announced on Wednesday 6th, was said to be indicative of its
commitment to Bitcoin. Its third quarter had seen the company acquire 218,887
Bitcoin to the tune of $20.5 billion. This took their combined total to an
eye-watering 471,107 coins. However, the price of their stock remained fairly
static. This was despite the fact that the bitcoin price today has
risen by almost 3%. This price increase may have been due to the factors
listed, including commitment from large companies such as financial
institutions. However, this has yet to have a knock-on effect on the share
price of Strategy.
The
company also runs a software business, which reported losses for its fourth
quarter. These were down 58 cents per share compared to earnings from one year
ago. This is a clear signal that Strategy could be planning to wind down this
aspect of their business and focus wholly on Bitcoin, thus sending confidence
through the crypto community.
Standard Chartered bitcoin forecasts
Another
bolstering cry for Bitcoin comes from Standard Chartered. A British-based multinational bank, they have operations in a
range of financial services. This includes banking, treasury services, and wealth management.
Listed on the London Stock Exchange and with dealings across the world, they
are as TradFi as companies come. Yet even they are looking hopeful for the
rising price of Bitcoin.
Their
head of digital assets research, Geoffrey Kendrick, has shared his predictions
in an email to a crypto news site. His boldest statement was that crypto could
reach the half-million mark by 2028. Broken down, he believes it will reach
$200,000 by the end of 2025. The end of 2026 will see levels of $300,000,
continuing in a steady trend. However, anyone knows that crypto rarely follows
such a clear path and is mired in volatility. He predicts that improved
investor access will limit this volatility and that it will still exist in the
short term to some extent.
Kendrick
also believes that changes implemented by the current US government will help
with this. Institutional inflows will begin to pick up as access increases. As
the infrastructure for this builds and the quality of inflows increases, the
price will naturally rise. He also referenced the success of the Bitcoin ETF
market in the United States and said other similar initiatives could reduce its
volatility.
Economic policies
While
all of this sentiment from digital and financial institutions is positive,
there are still worries about the future of crypto. Generally, these are linked
to short-term issues regarding the US economy and the direction it will
take.
The
main worry is the impact of tariffs on the US economy. While these do not have
a direct impact on the price of crypto, wider movements in the economy do. Over
the past few days, proposed tariffs on Mexico and Canada have been delayed.
However, other countries still face them. The worry is that this will cause an
inflationary period in the United States and push up interest rates. With high interest rates, people tend to shy away from riskier
assets, of which cryptocurrency is one. This could see a sell-off of bitcoin,
lowering its price.
Another
question mark hangs over the proposed Bitcoin strategic reserve that was to be
set up by the new administration. This was a fund that would invest in the
future of the nation. They are often used by countries that have an abundance
of natural resources and are funded from the surplus. However, very little has
been mentioned about the reserve. The government is said to be looking into
this and conducting further research. However, with the speed it has executed
many of its sweeping changes, it seems that if it had wanted to put this into
place, it already would have done so.
It
seems that incorporation into mainstream, traditional finance is inevitable. In
the short term, this means heightened volatility. You just need to decide your
risk tolerance as an investor. However, in the long term, the future looks
promising with more people predicting a rise in price. It may be a great time
to buy and hold.
