Bitcoin has been consolidating without a clear path as tariff threats and uncertainty from the Federal Reserve (Fed) keep the world’s largest crypto trading in a range.
Aggressive institutional purchases helped send Bitcoin to an all-time high over $108,000 in December. But the token has failed to hold above $100,000 reliably ever since.
Despite the optimism around institutional investments and regulatory support for crypto ETFs, tariff uncertainty and a hawkish Fed have clouded Bitcoin’s outlook.
Tariff Uncertainty and Hawkish Fed
President Trump’s newly proposed tariffs on semiconductors have added pressure to Bitcoin, as the risk-on asset remains closely linked to tech stocks.
Bitcoin could see additional pressure from the Fed’s hawkish stance. FOMC minutes showed that the Fed remains cautious on interest rates and is in no rush to cut rates. The minutes also revealed that Trump’s tariffs could cause disruptions in supply chains, adding to inflation fears.
These factors all add to Bitcoin’s downside risk, which has historically underperformed during high-interest rate environments.
Institutional Investments on the Rise
Bitcoin rebounded slightly on Wednesday as the world’s biggest holder, MicroStrategy, announced that it would buy more. MicroStrategy owns approximately 480,000 Bitcoins as of February 10, although the company halted its buying spree in recent weeks.
MicroStrategy also announced plans to raise $2 billion through convertible notes (a type of loan) to acquire additional Bitcoin. ⁽¹⁾
The crypto market faced outflows of $415 million from crypto ETFs (exchange-traded funds), which ended a 19-week streak of buying. The shift came as US inflation moved higher and expectations of a more hawkish Fed came into effect, which affected risky assets like Bitcoin. ⁽²⁾
However, institutional interest in Bitcoin ETFs still continues to rise, with fund managers increasing their exposure. Goldman Sachs has expanded its Bitcoin and Ethereum ETFs holdings to over $2 billion. This trend signals a broader acceptance of Bitcoin as a legitimate asset class among major financial institutions. ⁽³⁾
Abu Dhabi wealth fund Mubadala has also invested $436 million in Blackrock’s Bitcoin ETF, which acquired 8.2 million shares in late 2024. This indicates that institutional buying in Bitcoin is still strong, especially after rising 86% in 2024. ⁽⁴⁾
Regulation Developments and Outlook
Regulations continue to evolve as innovations are expected to support crypto ETFs. Bitcoin ETFs have seen major success, accumulating around $120 billion in assets during their debut. Crypto professionals expect growth in the future as crypto investments and trading have become easier to access. ⁽⁵⁾
Regulations could cause some pressure around new cryptocurrencies, which might complicate the creation of new ETFs for other digital assets.
In the US, the SEC has paused major cases against Coinbase and Binance to replan its enforcement strategy on regulations.
Legislative efforts are underway, with Senator Bill Hagerty and Representative Maxine Waters introducing competing bills aimed at establishing new stablecoin regulations, which could impact the government’s future policy on cryptocurrencies. ⁽⁶⁾
Final Thoughts
Despite Bitcoin’s strength from institutional buying, the crypto giant could face downside risk from economic uncertainties, including tariffs and high interest rates.
The evolution of crypto regulations and the success of Bitcoin ETFs signal a promising future, but short-term volatility may continue as economic factors weigh on risk assets.
