Bitcoin has been making headlines again, thanks to a major political shift in the US. After pro-crypto leader Donald Trump won the presidential election in November 2024, the crypto market responded with a strong 37.4% surge, boosting optimism across the board.
But the ride since then has been far from steady.
2025 kicked off on a high note, with Bitcoin rising 9.54% in January. However, the momentum didn’t last. February saw a sharp drop of 17.5%, followed by a smaller 2.19% decline in March.
April brought some relief with a 14.2% bounce back, and early May has shown a slight 0.38% increase. Still, the overall trend suggests the market is treading carefully.
Analyst Flags Warning Signs for Bitcoin’s Rally
Crypto analyst Timothy Peterson has raised concerns that Bitcoin’s rally might be losing steam. In a recent post on X, he highlighted two key risks: weakening investor sentiment and uncertainty around upcoming Federal Reserve interest rate cuts.
According to Peterson, the rally could stall if investors remain hesitant and broader market confidence stays low.
Peterson points to several indicators showing low confidence. The AAII Investor Sentiment Survey reveals that only 20% of investors currently feel bullish. Meanwhile, the NAAIM Equity Exposure Index is sitting at 60%, far below the 80% level that typically signals a strong bull market.
This cautious approach from both retail and institutional investors suggests hesitation to commit more capital – something that could weigh on Bitcoin’s price performance in the near term.
Another major factor hanging over the market is interest rate policy. Many investors are expecting at least three rate cuts from the Federal Reserve this year. That expectation has already impacted Bitcoin and other high-risk assets.
Peterson warns that if the Fed fails to deliver or continues selling government bonds, real yields could rise. That would reduce the appeal of speculative assets like Bitcoin, potentially putting further pressure on its price.
Bitcoin has shown some resilience so far in 2025, but its path forward is far from guaranteed. Much depends on two key factors: whether investor sentiment improves and if the Federal Reserve follows through on expected rate cuts.
If confidence doesn’t recover or the Fed delays action, Bitcoin’s current rally could quickly lose momentum.
Rate cuts can boost Bitcoin by lowering yields on traditional assets, making crypto more attractive to investors.
The Fed is expected to cut rates at least three times in 2025, impacting Bitcoin and other high-risk assets
As of May 2025, the Federal Reserve’s interest rate is 5.00%, with discussions about possible cuts throughout the year
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