Analyst: Bitcoin faces three major influences in 2025 - Trump administration's encryption policy, Federal Reserve's monetary policy, and US government debt

According to Barron's, as Bitcoin retraced to $94,000 on Christmas Eve, analyst Yuya Hasegawa elaborated on the three key factors affecting the crypto market in 2025.

Firstly, the direction of the Trump administration's cryptocurrency policy will dominate market sentiment. The strategic Bitcoin reserve plan proposed and progress in appointing pro-cryptocurrency nominees are expected to directly influence price trends of mainstream cryptocurrencies including Bitcoin, XRP and Dogecoin.

Secondly, Federal Reserve monetary policy will continue to impact the crypto market. Hasegawa pointed out that loose monetary policies have always been beneficial for Bitcoin prices while conversely creating negative effects. Although the Fed has cut interest rates by a total of 100 basis points this year, due to Trump's plan to impose tariffs of 10%-20% on all imported goods with tariffs potentially reaching up to 60% for Chinese goods; this could exacerbate inflationary pressures forcing the Fed maintain higher interest rate levels.

Thirdly, U.S government debt issues may become a new focus for markets. Hasegawa emphasized that high-interest-rate environments would increase government debt burdens. If concerns about debt sustainability arise and if America’s strategic bitcoin reserve plan is successfully implemented; then as digital gold - Bitcoin’s hedging properties might attract more attention which could further boost its valuation.