Corporate BTC holdings. Source: Bitcoin Treasuries
Monetary policy and inflation trigger volatility
Shifts in monetary policy and evolving inflation dynamics have also influenced Bitcoin’s price in 2025. The US Federal Reserve (Fed) delivered three 25-basis-point rate cuts in September, October, and December, bringing the interest rate down to the 3.5%–3.75% range by year-end from 4.25%–4.50% at the start of the year.
Lower interest rate expectations initially supported risk assets, as lower borrowing costs weakened the US Dollar, thereby increasing the risk appetite for BTC, which rallied earlier in the year.
Although market participants expected the Fed to ease policy more aggressively, the central bank acted more cautiously because inflation data in the US remained high.
Bitcoin initially rose on early signs that the Fed was becoming more dovish, but lost momentum amid the Fed's cautious stance. In short, monetary easing provided temporary support, but it was insufficient to sustain the upside, leading to periods of volatility and corrections.
In an exclusive interview with FXStreet, Gracy Chen, CEO at Bitget, said he thinks the three rate cuts from the Fed in 2025 acted as stabilizers for Bitcoin, instead of a growth engine. Lower rates eased pressure from real yields and made holding risk assets like Bitcoin more defensible.
Chen continued, “They didn’t trigger any significant rally. Each cut was followed by short-term volatility as traders focused more on risk appetite than on policy itself. But behavior has changed. Institutions have been more engaged through ETPs throughout the year, even when prices pull back, or during liquidations in October. Risk assets, overall, were repeatedly tested, but we think Bitcoin has held its ground.”
What is there for Bitcoin in 2026?
Looking ahead, the Bitcoin market is now anchored by structural changes and inflows, macro realignment, and clearer rulebooks. Here are some potential predictions for Bitcoin in 2026.
