As 2025 begins, Bitcoin's trajectory remains tied to shifting dollar liquidity conditions, becoming a key aspect amid U.S. economic policy.
Bitcoin and Dollar Liquidity: A Historical Correlation
Bitcoin's Q3 2022 price recovery aligned with a decline in the Federal Reserve's Reverse Repo Facility. The U.S. Treasury adjusted debt issuance favoring shorter-term bills, injecting over $2 trillion into markets, fueling rallies in crypto and tech stocks.
The Role of the Federal Reserve and U.S. Treasury
The Federal Reserve's monetary policy has limited influence on short-term liquidity cycles. The U.S. Treasury's actions concerning the debt ceiling are more pivotal. If political delays persist, the Treasury might increase market liquidity through spending from its Fed account.
Current Market Situation of Bitcoin
Bitcoin is currently trading at $96,727.99, reflecting a 5.09% increase over the last 24 hours. The market cap is at $1.91 trillion, with a 24-hour trading volume of $54.92 billion. MicroStrategy has increased its holdings to 447,470 BTC, and U.S. ETF inflows have surpassed $1 billion.
Bitcoin's trajectory in 2025 will depend on dollar liquidity conditions and market reactions to U.S. economic policies. Corporate and political support continues to play a crucial role.
