Crypto in the Context of the Global Economy

The cryptocurrency market is no longer an unfamiliar concept. By the end of 2024, the total market capitalization of crypto exceeded $3.33 trillion, with Bitcoin reaching the historic milestone of $100,000. However, as 2025 begins, the global economy faces major turbulence: inflation resurges, interest rate policies shift, and geopolitical tensions escalate.

For instance, in January 2025, a hack on the Bybit exchange resulted in a $1.46 billion loss, shaking investor confidence and causing Bitcoin to drop 10% within 24 hours (according to reports from X). Events like these raise an important question: Will crypto—from Bitcoin and Ethereum to various altcoins—continue to be digital gold in uncertain economic times, or will it succumb to pressure and decline? Let’s analyze the current economic landscape and two possible scenarios for crypto in the coming year.

The Global Economic Landscape in 2025: Key Factors

To understand where crypto is headed, we first need to examine the broader global economy. Here are three major factors shaping 2025, with real-world examples:

Inflation and Monetary Policy

Inflation in the U.S. is on the rise again. The Consumer Price Index (CPI) for October 2024 reached 315.644, with November 2024 projections hovering around 315.3. If inflation does not subside, the Federal Reserve (Fed) may maintain high interest rates or even increase them. For example, in 2022, when the Fed raised interest rates from 0.25% to 4.5% within nine months, Bitcoin dropped from $47,000 to $16,000—a clear illustration of how monetary policy impacts crypto. In 2025, high interest rates could continue exerting selling pressure.

Energy Crisis

Oil prices are rising due to recovering demand, as reported by OPEC in December 2024. This directly affects Bitcoin mining costs. For instance, in 2021, when energy prices surged in China, numerous Bitcoin mining farms were forced to shut down, causing global hashrate to drop by 30% and Bitcoin’s price to plummet temporarily. If mining costs rise in 2025, the supply of new Bitcoin may shrink, potentially driving long-term price increases. However, in the short term, cost pressures could trigger miner sell-offs.

Trade Policy and Geopolitics

President Donald Trump, inaugurated in January 2025, has pledged to impose heavy tariffs on China. This could strengthen the U.S. dollar, reducing crypto’s appeal in the short term. For example, in 2018, when Trump imposed a 25% tariff on Chinese goods, Bitcoin fell from $6,500 to $3,200 within three months as investors turned to the U.S. dollar as a safe-haven asset. However, if the trade war escalates in 2025, stablecoins—currently with a market capitalization of $120 billion—could become an alternative tool for international transactions.

Crypto in the Economic Storm: Soaring or Sinking?

Based on the economic outlook, crypto faces two distinct scenarios, illustrated with real-world cases:

Scenario 1: Soaring High

In 2024, the number of crypto holders surged to 617 million, and Bitcoin hit $100,000 in December, fueled by institutional money pouring into Bitcoin ETFs (holding 1.1 million BTC). The Trump administration has proposed the idea of a strategic Bitcoin reserve—an initiative that once helped gold rise by 20% in the 1970s when the U.S. stockpiled precious metals. If this policy materializes, Bitcoin could reach $200,000. For example, when PayPal integrated Bitcoin payments in 2020, its price jumped 50% in just three months—demonstrating how institutional support can drive crypto to new heights.

Scenario 2: Sinking Deep

If the economy falls into recession (Deloitte forecasts Iceland’s GDP growth at only 2-2.5%), altcoins—which account for $1.5 trillion in market capitalization—will suffer the most. For instance, in 2022, the collapse of Luna (falling from $116 to $0 within a week) caused numerous altcoins to plunge by 70-90%. The EU’s MiCA regulation in 2025 may also increase compliance costs for small projects, leading to widespread bankruptcies. If the Fed aggressively hikes interest rates, Bitcoin could drop to $70,000, similar to its decline in 2018 when U.S. interest rates rose from 1.5% to 2.5%.

Lessons from 2024: What to Expect in 2025

Looking back at 2024, crypto demonstrated both resilience and vulnerability. Bitcoin surged 150% from $44,000 to nearly $100,000, despite economic fluctuations. DeFi reached $200 billion in Total Value Locked (TVL), reinforcing the appeal of decentralized finance. Stablecoins processed transactions comparable to Visa and Mastercard, with Circle (issuer of USDC) reporting over $1 trillion in transaction volume in Q3 2024.

However, crypto remains susceptible to risks. When the Fed raised interest rates in mid-2024, Bitcoin dropped 15% within a week. The Bybit hack in early 2025 (losing $1.46 billion) wiped out over $110 billion from the market in 24 hours. The lesson: Crypto rebounds strongly but is not immune to monetary policies and security incidents.

Conclusion: What Will Shape Crypto’s Future?

2025 represents a crossroads for crypto. If the economy stabilizes and crypto-friendly policies (such as a Bitcoin reserve) are enacted, Bitcoin could “soar” to new all-time highs—just as El Salvador’s adoption of Bitcoin as legal tender in 2021 led to a 30% price surge in two months. Conversely, if a recession occurs and regulations tighten, crypto could “sink”—similar to the 2022 FTX collapse, which slashed the market by 50%.

Nonetheless, the long-term outlook remains promising. With an estimated 861 million users by the end of 2025, crypto is unlikely to disappear. Investors should closely monitor Fed interest rate decisions, energy prices, and Trump’s policy moves. Will crypto soar or sink? The answer lies in how the global economy unfolds throughout the year.