Global sales in financial markets caused by new Trump tariffs have withdrawn Bitcoin (Cryptography: BTC) Bear. The current idea is that Bitcoin can be hampered by a decline in economic growth, rising inflation and a mix of uncertainty across the market.
But how many of these bearish predictions are simply cases where investors are overreacting? After all, as many crypto investors have now pointed out, there are no tariffs on Bitcoin. To understand where Bitcoin is heading next, it’s down almost 30% from its all-time high of $109,000 in January, but you’ll need to ask yourself three important questions.
For much of its history, it is called digital gold, given that Bitcoin shares some of its same properties as physical gold. Bitcoin, for example, is inherently lacking. Its total lifespan supply closes with 21 million coins. With 20 million coins already circulating, 95% of all Bitcoins exist already exist.
Furthermore, Bitcoin is essentially a fire assets due to an algorithm-controlled event known as harving, and the reward for mining new Bitcoin is reduced by half every four years. Adds the fact that the typical image (a lovely, shiny gold coin) used to portray Bitcoin will create a spiritual image of Bitcoin as a perfect, safe asset.
But is that? During the stock market decline in 2022, Bitcoin never held up as a valuable store. That year, the S&P 500 fell by 18%, while Bitcoin fell by 64%. Meanwhile, gold retained its value, slightly increasing its 0.4%.
But in early 2023, Bitcoin proved its value amid the regional banking crisis. At the time, there was a clear flight to safety, and investors moved to Bitcoin. The idea was that Bitcoin was then relatively insulated from the traditional financial system and that it was safer to put money into Bitcoin than US banks.
So you can see where I’m going with this. 2025 is becoming the ultimate test of Bitcoin. Gold prices have skyrocketed over $3,000 a year, but Bitcoin has fallen almost 30% from that level. So let’s see what happens next. If investors continue to pile up on gold, but give up on Bitcoin, their worthy storage and digital gold theories may turn out to be pure sleepers.
And that leads us to the main reasons why investors should worry about Bitcoin right now. It is beginning to behave like an increasingly unstable technology stock. Historically, this has never been the case. Bitcoin had little correlation with all major asset classes, including high-tech stocks.
The story continues
In 2024, WisdomTree analyzed the correlation between eight major asset classes and Bitcoin from 2012 to 2023. During that period, the typical correlation with Bitcoin’s technology stocks is between 0.2 and 0, showing the lowest correlation. Otherwise, they actually showed negative correlations. In other words, when the value of tech stocks fell, Bitcoin increased in value.
But what’s happening in 2025 is really different. According to a new study by Standard Chartered, the correlation between Bitcoin and tech stocks reached 0.8 at the beginning of the year, and is now around 0.5. It is very expensive from a historical perspective.
Image source: Getty Images.
So, what will happen in 2025? If you’re looking at the stock market turmoil right after Trump’s tariff announcement, you’ll understand why I’m so interested now. Tech stocks were deep in the red. So if Bitcoin is correlated with Tech and the technology is lower, does that mean Bitcoin is lower too?
It is also useful to look at the online forecast market where people are predicting the future price of Bitcoin. People put real cash to make these predictions, so if you believe in the wisdom of the crowd, it’s worth hearing what they have to say.
Based on the results of the Kalshi Online Forecast Market, the crowd believes that Bitcoin is 63% likely to fall below $70,000, and a 34% chance of falling below $60,000. Put another way, Bitcoin could lose at least one 24% of its value, starting from its recent price of around $78,500.
We intentionally used the term “crowd” here. That’s because there has always been a fundamental tension between the “crowd” and the “experts” (i.e. people who are compensated very expensively on Wall Street). They claim that each knows better than the others.
So do what you want with these online predictions. Maybe they’re totally worthless. After all, some experts are still asking Bitcoin to reach $200,000 this year. Some believe that Bitcoin could reach $250,000 by the end of 2025.
From my perspective, $70,000 is the key price level for Bitcoin. This is roughly the same price Bitcoin was trading on Election Day. So, while the price decline for Bitcoin was unexpected this year, the $70,000 price really means we’re back to squares. I’m still a long-term bullish person with Bitcoin and use the price of $70,000 to scooter more Bitcoin at a cheaper price.
Consider this before purchasing inventory with Bitcoin.
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Dominic Basulto has a position in Bitcoin. Motley Fool has a position and recommends Bitcoin. Motley Fools have a disclosure policy.
How low is Bitcoin? Originally published by The Motley Fool
