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Bitcoin Drops, But Experts Say a Rebound is Coming—Here’s Why
Fed Decision, AI Breakthroughs, and New Regulations—What’s Next for Bitcoin?
Bitcoin’s Short-Term Struggles vs. Long-Term Potential: The Big Picture
Bitcoin’s price dropped over 1.6% today as investors await the Federal Reserve’s upcoming decision on interest rates. Analysts are split on whether the Fed will keep rates unchanged or introduce a slight dovish surprise, which could temporarily boost Bitcoin’s value. According to 10x Research, such a move could provide short-term support, while Standard Chartered Bank’s Geoffrey Kendrick predicts that if the Fed stays neutral, Bitcoin could soon rebound to $105,000.
Meanwhile, China’s AI sector is making waves. DeepSeek AI has drawn attention for reportedly achieving results comparable to top AI firms—but at a fraction of the cost, just $5 million. Standard Chartered suggests that cheaper AI technology could help lower inflation, indirectly benefiting Bitcoin. Kendrick clarified that DeepSeek itself isn’t a direct threat to Bitcoin but could contribute to its long-term growth.
In the U.S., regulatory changes could further shape the crypto market. The SEC recently revoked Staff Accounting Bulletin No. 121, a rule that required companies holding crypto to classify it as a liability. This decision, championed by SEC Commissioner Hester Peirce, signals a friendlier regulatory stance and is expected to encourage greater institutional adoption of Bitcoin.
Institutional investment in Bitcoin is already growing. Over the past year, Bitcoin ETFs have attracted net inflows of $38 billion, yet pension funds hold just 1% of this amount. Kendrick believes that in 2025, major investment firms managing $40 trillion in assets will increase their Bitcoin exposure, potentially driving inflows higher than last year.
On the international front, central banks are exploring Bitcoin reserves. Czech National Bank Governor Aleš Michl is proposing a $7 billion Bitcoin investment, which, if approved, would make the Czech Republic the first Western nation to hold Bitcoin in its official reserves. Michl views Bitcoin as a valuable diversification tool.
Despite short-term price swings, Bitcoin’s long-term outlook remains strong. CryptoMondays founder Lou Kerner emphasizes that Bitcoin’s scarcity and growing global demand will continue to drive its value. While external factors—such as DeepSeek’s rise or potential trade tariffs under a future Trump administration—may cause short-term volatility, many analysts see Bitcoin as a hedge against economic uncertainty.
With financial, regulatory, and institutional changes unfolding, Bitcoin remains a key asset in global markets, balancing short-term turbulence with long-term growth potential.
