A Year On, Bitcoin Languishes a Third Below its All-Time High. What's Next For The Cryptocurrency? — Analysis
By Joseph WilkinsOne year after hitting an all-time high, bitcoin is trading about one-third lower, leading market watchers to question what comes next for the flagship cryptocurrency.Bitcoin was on a tear during the first six months of President Trump's second term, fueled in part by expectations of supportive regulation for the industry. In March 2025, Trump signed an executive order officially establishing a strategic bitcoin reserve and a stockpile for other cryptocurrencies. In early October 2025, bitcoin hit a record high of more than $126,000.Since then it lost more than half its value, before paring some of those losses in recent months to trade at $83,264 on Friday.Where the price goes next is almost entirely driven by macroeconomic factors, not crypto-specific regulation, according to analysts. Multiple catalysts could drive the price of bitcoin up before the end of the year.Despite the one-year decline, bitcoin's prospects look considerably less bleak than over the summer, during which time prices fell as low as $58,000 in June. A recent rally has seen bitcoin trade back above the $80,000 level, marking a return to the 'debasement trade' that began with Treasury Secretary Scott Bessent's intervention in the Treasury markets, CFD trading platform Capital.com's Kyle Rodda said.The so-called 'debasement trade' has gathered steam in recent years as investors seek to protect their investments from losing purchasing power, by shifting away from fiat currencies and bonds into hard assets such as precious metals and cryptocurrencies."That fundamental driver reveals a lot about Bitcoin's function and why it's remained relatively well supported recently," Rodda said. "It's a trade on U.S. policy largesse, an anti-fiat hedge and overall a portfolio diversifier." Rodda added that bitcoin's prospects are looking increasingly positive and the lows of the cycle may have passed.Optimism is also picking up again among institutional buyers for the same reason. Citibank boosted its 12-month bitcoin target price to $113,000 from $82,000 amid renewed concern that large government deficits could erode the value of fiat currencies.Meanwhile, analysts say receding expectations for an aggressive rate-hike cycle from the Federal Reserve should also support bitcoin.Bitcoin is beholden to the broader inflation picture and outlook for interest rates for now, rather than crypto-specific legislation in Washington, in the aftermath of the failed Clarity Act bill. The legislation was designed to establish the first comprehensive regulatory framework for digital assets, eventually helping to widen acceptance of crypto assets.The probability of an October hike has fallen to below 20%, and bitcoin could be in for another rally as a result, cryptocurrency research outlet Coin Bureau's Nic Puckrin wrote in a note. "The next target is the psychologically significant $90,000, and $92,000 is the next resistance level to watch if it manages to break out of its current holding pattern," he said.That said, challenges for bitcoin remain. High Treasury yields, a strong U.S. dollar and elevated oil prices have capped investors' enthusiasm for bitcoin and other non-interest-bearing assets.Since consolidating above the $80,000 threshold, bitcoin has struggled to mount a further push beyond $87,000. A key test for crypto for the rest of 2026 rests on whether softer inflation and wage growth can bring down Treasury yields and cause the dollar to weaken, which would ease financial conditions for cryptocurrencies."The test is whether ETF inflows remain strong and Bitcoin can keep the $85,000 area as a floor if macro conditions turn less friendly," said Maksym Sakharov, CEO of on-chain banking infrastructure provider WeFi. "If buyers keep showing up on red days, I'll believe the market has changed."Write to Joseph Wilkins at [email protected]