3 Reasons the Bitcoin Surge Isn't Over

Key Points

• If the Federal Reserve lowers its benchmark interest rate this year, it could result in investors taking on more risk.

• Based on the past two halvings, Bitcoin’s price could reach a fresh all-time high in the next few months.

• Bitcoin's hard supply cap is what matters most over the long term.

• 10 stocks we like better than Bitcoin ›

Bitcoin (CRYPTO: BTC) is having another fantastic year. After the leading digital asset's price soared 154% in 2023 and 119% in 2024, it is so far up 27% in 2025 (as of July 24). Investors who have been critical of Bitcoin can no longer ignore it as being a smart addition to a portfolio.

But with the price not too far off the all-time high of $123,091.61, established on July 14, it's understandable if you're worried about a potential dip in the near term. That way of thinking is logical, especially when it seems like bullish fever is taking hold of market participants.

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My view, however, is to remain optimistic. Here are three reasons I think the Bitcoin surge isn't over.

Image source: Getty Images.

1. A favorable macro backdrop

The last time the Federal Reserve cuts its benchmark federal funds rate was in December. The uncertainty brought about by the dynamic trade situation gave central bankers a reason to see how things will play out before making any further reductions. It also hasn't helped that inflation remains above the Fed's long-run 2% target.

The stock market has done remarkably well even though the fed funds rate is still at an 18-year high. However, people are waiting for a more accommodative stance. There are expectations that the central bank will start to cut rates before the end of this year, continuing as the calendar turns. Goldman Sachs sees the fed funds rate getting closer to 3% by July 2026, well below the 4.33% where it currently stands.

This backdrop can be bullish for Bitcoin. Investors will take on more risk to compensate for lower yields that they'd earn on savings vehicles. What's more, the market will quickly realize that the Fed is trying to stimulate the economy, which can result in a more positive outlook that influences how capital is allocated.

2. Post-halving cycle

About every four years, Bitcoin undergoes what's known as a halving. This critical event cuts in half the amount of new Bitcoin miners are rewarded for processing transactions. It's a predetermined schedule that's set in Bitcoin's software, and it determines the cryptocurrency's supply growth rate.

Looking at a historical price chart of Bitcoin reveals that the digital asset experiences similar cycles that center on its halving dates. Halving events happened in July 2016 and May 2020. Bitcoin reached a new all-time high roughly 18 months after these dates. The latest halving occurred in April 2024, which means a new peak could be achieved around October of this year.

Although we can look at past cycles to try and figure out what the future holds, there are no guarantees. No two cycles are exactly the same because there are many other variables that can have an impact on the price. For what it's worth, this time around, there are spot Bitcoin exchange-traded funds (ETFs), Bitcoin treasury companies, and supportive regulation as reasons to be optimistic.

3. Scarcity matters over the long term

It's easy to get caught up in forecasts about Bitcoin's price trajectory during the near term. However, what investors should really focus their attention on is what could happen over the long term, say five or 10 years from now.

That perspective will force investors to think about what matters most. In Bitcoin's case, it's the simple fact that there will only ever be 21 million coins in circulation. This is a hard supply cap that separates Bitcoin from virtually any other asset on the planet. After the latest halving, Bitcoin's annual supply growth rate is lower than gold's, making the digital asset scarcer.

As more capital over time starts to gravitate toward something that can't be debased, Bitcoin's price is likely to be much higher far into the future.

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Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin and Goldman Sachs Group. The Motley Fool has a disclosure policy.