Bitcoin (BTC) is heading into the second half of 2025 with a sense of uncertainty, as long-term supportive factors continue to underpin its upward momentum, while simultaneously facing a complex mix of macroeconomic, policy, and geopolitical risks.
After a strong rally in Q2 driven by expectations of monetary policy easing and institutional capital flowing into spot Bitcoin ETFs, the market has now entered a phase of re-pricing expectations—typically characterized by caution and higher volatility.
The key focus remains the policy direction of the U.S. Federal Reserve. Recent inflation data in the U.S. has shown signs of cooling, opening the door for a potential rate cut as early as Q3.
Given Bitcoin’s sensitivity to liquidity conditions, it tends to react positively when global interest rates decline. In a scenario where the Fed begins easing in September—as the market widely anticipates—BTC could resume its upward trajectory, especially if spot ETFs continue to attract institutional inflows, which are still in an exploratory phase.
However, the story doesn’t end with the Fed. Ongoing geopolitical uncertainty—particularly the escalating conflict in the Middle East and unresolved tensions between the U.S. and China—is also sending ripple effects through risk asset markets. On one hand, such instability boosts demand for hedging assets, and Bitcoin is at times regarded as a form of “digital gold.” On the other hand, extreme uncertainty often prompts short-term capital to retreat from crypto markets and flow into traditional safe havens like the U.S. dollar and Treasury bonds. Bitcoin’s inconsistent response to geopolitical shocks suggests that it is not yet a full-fledged substitute for gold as a defensive asset, and still depends heavily on investor sentiment and institutional positioning.
At present, Bitcoin appears to be cooling off after a sustained rally since April, but there are no clear signs of a trend reversal. The fact that prices remain resilient indicates that selling pressure is not yet dominant and that belief in the broader uptrend remains intact. However, for BTC to extend its gains and establish new highs, further confirmation is needed: renewed net inflows into ETFs, a clear recovery in trading volume, and a shift in investor sentiment away from defensive positioning.
Conversely, if the Fed unexpectedly maintains a hawkish stance or if geopolitical tensions escalate into a full-blown energy crisis, Bitcoin could face a deeper corrective phase.
Tomorrow, markets will turn their attention to the Fed’s interest rate decision and the upcoming FOMC meeting, where signals relevant to Bitcoin’s short-term path may be indirectly revealed.
Ultimately, as Bitcoin’s role within institutional portfolios continues to expand, it is gradually transitioning from a speculative asset to a component of global asset allocation strategies. In the medium term, provided that global liquidity is not abruptly tightened and ETFs continue to operate smoothly, BTC has a viable path to sustaining its bullish trend. That said, persistent policy and geopolitical uncertainties demand careful preparation and disciplined risk management from investors.
