In January 1st 2025 Bitcoin was trading at USD 94,416.28 according to Coinmarketcap.com, it is at USD 87,294.12 at the time of this writing. In October of this Bitcoin reached its all-time high of USD 126,198.07. It has been a rollercoaster ride for bitcoin investors, let’s take a look at the factors that affected these valuations in 2025.

The 2024 Bitcoin Halving

Last year bitcoin miner rewards were cut in half. This results in a reduction of fresh bitcoin supply to the market. This simple factor makes price go up in cases where the demand remains steady. That is the most basic law of economics (The Law of Supply and Demand).

Involvement of Traditional Financial Institutions

In a previous article I analyzed the effects of increasing institutional adoption of bitcoin, and crypto in general. This year saw more financial institutions getting involved in cryptocurrency on behalf of its customers.

Increased Regulatory Clarity

Serious investors do not gamble. Cryptocurrency’s role in the financial world has been looked at with suspicion.  Governments around the world have been slow to recognize or accept that there is a genuine need or role for cryptocurrencies in the global financial structure.

Most investors see bitcoin as the most reputable of all cryptocurrencies. As regulations are put in place to protect investors, they are drawn to bitcoin as a gateway into this new financial world.

Macroeconomic Policies

2025 was a year of economic uncertainty in a global level. Sweeping reforms to the world economic order were proposed, raising fears of a collapse of international trade. At the same time, many central banks that had been stuck in high interest rate cycles began a softening of their positions.

Involvement of Corporations

Corporate treasuries kept buying bitcoin (and other cryptocurrencies) as a way to bolster their company’s holdings. Bitcoin is increasingly gaining traction as a hedge against inflation. Corporations seeking to shield themselves from inflationary effects are buying and holding bitcoin. This has resulted not only in an increase in the currency’s underlying value, but more importantly has reduced bitcoin’s volatility.

As you can see, the effects of these five factors are not all equal. While some may be pushing up the price of bitcoin, others push it lower or may even dampen any price movements. I will be reviewing these factors in more detail in future articles.