Why Has Bitcoin Price Declined Recently? What to Expect in the Long Term?

Bitcoin faced fresh pressure in the first week of 2025 as stronger-than-expected U.S. employment data and ongoing inflation concerns weighed on investor sentiment.

Economic concerns are increasingly overshadowing the post-election euphoria that initially fueled Bitcoin’s rally. Optimism about President-elect Donald Trump’s return to office had fueled hopes for clearer regulations and more crypto-friendly policies, including the potential for a strategic Bitcoin reserve.

Bitcoin Opportunity Fund co-founder David Foley shared his views on recent market dynamics in an interview with CNBC’s Crypto World. Foley noted that Bitcoin rose significantly in anticipation of the Trump administration’s potential pro-crypto stance, but recent economic data has shifted the focus back to macroeconomic factors.

“There’s no doubt that Bitcoin is bullish on sentiment like Trump’s victory, better regulatory clarity and strategic crypto moves,” Foley said. However, he noted that the market is showing signs of hesitation as inflation concerns and a hot jobs report have contributed to the recent volatility.

Bitcoin’s correlation with traditional financial markets, particularly the Nasdaq, remains a key factor. Foley observed that while the broader stock market has struggled, Bitcoin has shown signs of resilience and is acting as a “flight to safety” asset similar to gold. “Bitcoin is thriving and will likely evolve into a risk-off asset in the medium term,” he added.

The conversation also turned to MicroStrategy, a company closely tied to Bitcoin due to its significant BTC holdings.

“Michael Saylor and his team created a flywheel effect by leveraging various capital markets products, such as convertible debt and perpetual franchises, to acquire Bitcoin,” Foley said.

Bitcoin’s price could see fluctuations as the market adjusts to changing economic data and the expected policies of the new administration. But Foley remains optimistic about the long-term growth trends in the crypto space. “Markets are taking a breather,” he said. “Bitcoin may be taking a break before it continues its rise.”

*This is not investment advice.