Bitcoin rallies above $106K but 3 key actions must happen for new all-time highs

Bitcoin ( BTC ) had a strong start to 2025, gaining 13.5% in the first 30 days. This price movement reflected a complete turnaround in the United States government's attitude, becoming more favorable for the sector. However, Bitcoin’s price has been capped at $105,000, leading traders to question the reasons behind the apparent stagnation.

The conditions for a sustained Bitcoin bull run are present, but three factors are preventing a new all-time high. The Trump presidency in the US is increasing opportunities for banks and hedge funds to custody digital assets without affecting their balance sheets.

US Federal Reserve chair Jerome Powell, addressed the issue in a press conference after a Federal Open Market Committee (FOMC) meeting on Jan. 29. Powell stated that banks were “perfectly able to serve crypto customers,” provided they managed the risks, adding that the institution is “not against innovation.”

On Jan. 30, the board of the Czech National Bank (CNB) approved a proposal to assess Bitcoin investments as part of its international reserve management strategy. The announcement followed CNB Governor Aleš Michl's interview with the Financial Times, in which he revealed the intention to allocate up to 5% of the country’s €140 billion reserves to Bitcoin.

Further boosting Bitcoin’s price momentum was the announcement on Jan. 30 from a fund managed by the Norwegian Central Bank , revealing investments of $500 million in MicroStrategy shares. It is important to note that some funds require shareholder approval or face regulatory restrictions to purchase Bitcoin using spot exchange-traded funds (ETFs), hence the use of the US-listed company as a proxy.

Global economic slowdown, AI bubble and slow institutional adoption

Despite favorable news flow, Bitcoin’s price was unable to break above the $106,000 barrier. Therefore, analyzing what is causing investors to act more cautiously is essential to understanding the timeframe for a new BTC all-time high. Traders fear that the global economic slowdown will trigger a “flight to quality” movement, where the market seeks shelter in cash and short-term government bonds.

The US gross domestic product grew by 2.3% in the fourth quarter of 2024, slightly below market expectations. Similarly, the eurozone economy posted zero growth during the period, according to data released on Jan. 30. The lack of growth will likely force central banks to inject stimulus measures, which is beneficial for Bitcoin’s price in the medium term. However, traders fear that the short-term negative impact could harm Bitcoin’s price.

The recent launch of the DeepSeek artificial intelligence by Chinese competitors surprised the industry, causing record-breaking losses in stocks. Traders saw the sector's relative fragility for the first time. Even though there's no direct impact on BTC, investors' risk appetite was reduced as hedge funds tend to decrease exposure in assets that have gained the most, and BTC outperformed most sectors.

Related: El Salvador rushes in new Bitcoin law to comply with IMF deal: Report

The Trump administration is definitely dismantling Operation Choke Point 2.0 , but that does not mean banks will start embracing Bitcoin immediately. There needs to be clearer accounting and risk-calculation rules and perhaps the approval of in-kind ETFs, which would allow more integration with traditional markets.

Until these three conditions are met, Bitcoin’s upside above $105,000 appears limited. However, further institutional adoption, especially from nation-states, could propel BTC’s price much higher.

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.