Why Did Bitcoin Crash? Bitcoin Price Prediction for 2025

Bitcoin crash refers to Bitcoin price A cliff-like drop in the short term is usually accompanied by market panic and a massive evaporation of market value. For example, in February 2025, Bitcoin plummeted from a high of over $108,000 to below $89,000, with a weekly decline exceeding 16%, triggering a wealth reduction of nearly $500 billion in the cryptocurrency market. Such dramatic changes are often triggered by black swan events (such as exchange hacks) or shifts in macroeconomic policy, highlighting its volatile nature as a high-risk asset.

Causes of the Crash: Resonance of Three Major Risks

1. Regulatory and Policy Uncertainty: Although the approval of the spot Bitcoin ETF in the United States has boosted market enthusiasm for 2024, there are still hidden dangers due to the lag in policy implementation. For example, the delay in fulfilling the “Bitcoin Strategic Reserve” plan promised by the Trump administration has weakened investor confidence, leading to price corrections. Economist Peter Schiff warns that the global debt crisis in 2025 (with U.S. national debt reaching $36.8 trillion) could severely impact Bitcoin, as its liquidity will be affected by a run on traditional financial markets.
2. Market Overheating and Derivative Leverage: When 97% of Bitcoin holders are in profit (as of May 2025 data), the market is often close to the edge of correction. During the same period, the derivative market’s open interest soared to $67.5 billion, with high leverage exacerbating liquidation risks, where even minor price fluctuations can trigger a chain sell-off.
3. Geopolitical conflicts and systemic risks: Global trade frictions (such as the 145% tariffs imposed by the U.S. on China in April this year) have raised inflation expectations, forcing the Federal Reserve to maintain high interest rates. This action suppresses the valuations of risk assets, while Bitcoin is often classified by institutions as an “ultra risk-on asset,” making it particularly vulnerable in times of macroeconomic uncertainty.

Future Outlook: Key Pathways in the Bull-Bear Tug of War

Bullish Momentum: Scarcity and the Wave of Institutionalization

• Halving Effect and Scarcity Dividend: In April 2024, Bitcoin will complete its fourth halving, reducing the block reward to 3.125 BTC. Historical data shows that a bull market cycle generally occurs 12-18 months after a halving (for example, the price increased by 650% after the 2020 halving). Coupled with the influx of hundreds of billions of dollars from spot ETFs, the supply-demand imbalance could drive the price to surge to $150,000 by the end of 2025.
• The trust crisis in the fiat currency system boosts alternative assets: global government bond yields soar (the US 30-year reaches 5.15%, Japan 30-year breaks 3.1%), exposing the vulnerability of traditional safe-haven assets. Bitcoin, due to its depoliticized nature and fixed supply characteristics, has become a new choice to hedge against debt inflation, with institutional holdings through ETFs exceeding $104 billion.

Downside risk: Correction cycles and alternative competition

• Cyclical bear markets and profit-taking: If Bitcoin breaks through $150,000 in 2025, it may enter a deep correction in 2026, touching a minimum support level of $80,000. This pattern aligns with its historical cyclical law of “rally - consolidation - retracement.”
• Regulatory lag and technological substitution: If countries fail to establish a clear framework for crypto assets, the pace of institutional entry will slow down. At the same time, competition from smart contract platforms like Ethereum in payment and DeFi scenarios may divert demand for Bitcoin as a store of value.

Investment strategy: balancing risk and opportunity

Current market forecasts show a diverging trend: Kalashi’s predictive market data indicates that 78% of participants believe Bitcoin will reach $125,000 by 2025, but there is also a 22% probability that it will fall below $70,000. Investors are advised to adopt the following strategies:

1. Position Management: Allocate no more than 5% of the portfolio to Bitcoin to avoid single asset risk.
2. Follow the signals: track the US interest rate policy, the inflow of spot ETF, and CoinGlass leverage data.
3. Long-term layout: Price expectation of $400,000 in 2030, suitable for dollar-cost averaging to smooth out volatility.

Conclusion

The collapse and rebirth of Bitcoin is essentially the result of the tug-of-war between global liquidity, technological innovation, and regulatory processes. Although short-term fluctuations are inevitable, its censorship-resistant characteristics and fixed supply mechanism still confer unique value in an era of declining fiat currency credit. Investors need to be wary of black swans, but they should pay more attention to long-term trends—when the Japanese government bond yield curve inverts and U.S. debt interest payments approach a trillion dollars, the narrative of Bitcoin as “digital gold” may face its true test. In a high-risk, high-reward game, only discipline and insight are the rules for survival.