Bitcoin to $85,000 by Year-End? Tariffs, Liquidity Play Key Role, Says Economist
Macroeconomist Lyn Alden maintains a bullish outlook on Bitcoin, but cautions about potential headwinds from financial market volatility and trade policies.
Despite recent market fluctuations and ongoing global trade tensions, macroeconomist Lyn Alden anticipates Bitcoin (BTC) will close 2025 above its current level of approximately $85,000. However, she suggests that the cryptocurrency’s potential could be even greater absent certain economic factors.
“I would have had a higher price target in front of the whole of the customs confusion,” Alden said in the program Coin Stories of April 17 to Natalie Brunell. “my guess is that we will be higher at the end of the year than now,” she added.
Liquidity as a Catalyst
Alden believes that a meaningful boost to Bitcoin’s price could stem from a surge in market liquidity. She pinpointed specific scenarios that could trigger such a surge.
She added that the catalyst could be a “massive release of liquidity”, the Bitcoin required to achieve more optimistic goals, similar to before the introduction of the tariffs.
Such as, when the US bond market “collapses” and the US central bank has to intervene with measures such as the control of the interest curve or a massive quantitative loosening (QE), Alden said.
Quantitative easing, a monetary policy where a central bank injects liquidity into the economy by purchasing assets, has historically been associated with increased investment in choice assets like Bitcoin as investors seek to hedge against inflation and currency devaluation. The Federal Reserve’s actions during the 2008 financial crisis and the COVID-19 pandemic offer prime examples. However, this strategy is not without risk. Critics argue that excessive QE can led to asset bubbles and long-term economic instability.
The 24/7 Nature of Bitcoin Trading
A unique aspect of Bitcoin, its continuous trading cycle, presents both opportunities and challenges, according to Alden. Unlike traditional stock markets with set trading hours, Bitcoin operates around the clock, every day of the year.
Although Alden said that there is a “good chance” that Bitcoin will recapture the price level of $ 100,000 before the end of the year, she emphasized that wider financial market will remain a challenge for the crypto market leader, especially since Bitcoin is traded around the clock, in contrast to traditional stock markets with fixed trading times.
“Since it is traded around the clock, the people who are worried can sell their Bitcoin on Sunday and prepare for them,” she said.
Alden further explained that the trade in cryptocurrencies around the clock contributes to the “volatile courses”, especially if the traditional financial markets “freak out”.
This always-on availability can exacerbate price swings, particularly during times of market uncertainty. News events occurring outside of traditional market hours can trigger immediate reactions in the Bitcoin market, potentially leading to increased volatility.
Decoupling from Traditional Markets
Despite the interconnectedness of financial markets, Alden suggests that Bitcoin possesses the potential to diverge from traditional assets like the Nasdaq 100 under specific circumstances.
Though, Alden emphasized that Bitcoin from the Nasdaq 100 can “decouple”, especially in situations that “violate the margins of Nasdaq” without affecting global liquidity. As an example,she cited a possible repetition of the five years before the global financial crisis of 2008,which in her opinion could be favorable for Bitcoin.
It referred to the time from 2003 to 2007, in which there was a cycle with a weaker US dollar, and even though there was no mass fleeing from the capital markets, a lot of money was still flowed into “emerging countries”, raw materials, gold and other assets-whereas US shares where “no longer really the right place”.
“If we experience such a five-year period again,it might very well be a period in which Bitcoin cuts off quite well,even if the US stock market does not cut particularly well.”
This decoupling could occur during periods of dollar weakness or when capital flows shift away from U.S. equities towards emerging markets or alternative assets.In such scenarios, Bitcoin’s appeal as a decentralized, scarce asset could increase, driving its price higher even if traditional markets struggle.
In an analysis report in september,Alden wrote that Bitcoin moves 83 % towards the global M2 in a certain 12-month period.
The study entitled “Bitcoin a Global Liquidity barometer” compared Bitcoin to other important investment classes such as the SPX, gold and VT stock index, and BTC led the correlation index regarding global liquidity.
Counterargument: Bitcoin’s Correlation with Tech Stocks
One argument against Alden’s decoupling thesis is Bitcoin’s observed correlation with technology stocks, particularly those in the Nasdaq 100. Many analysts point out that Bitcoin has often traded in tandem with tech stocks, behaving more like a risk-on asset than a safe haven. However, Alden’s scenario emphasizes specific conditions where this correlation might break down, particularly during periods of distinct monetary policy or shifts in global capital flows.
FAQ: Bitcoin and Market Volatility
| Question | Answer |
|---|---|
| will tariffs affect Bitcoin? | Tariffs introduce economic uncertainty, potentially impacting liquidity and investor sentiment, which can affect Bitcoin’s price. |
| Can Bitcoin really hit $100,000 this year? | Alden believes there’s a “good chance,” but wider financial market conditions will play a significant role. |
| Is Bitcoin a hedge against inflation? | Some investors view it as such, but its volatility makes it a riskier hedge compared to traditional assets like gold. |
| what is quantitative easing (QE)? | QE is when a central bank injects liquidity into the economy by purchasing assets. |
| Why is Bitcoin so volatile? | Its 24/7 trading, speculative nature, and sensitivity to news events contribute to its price swings. |
