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This article does not constitute financial advice and is designed for information purposes only.

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Just this week, Bitcoin officially hit all time highs, trading above $126,000 for the first time ever, before taking a slight dip.

At its peak, Bitcoin was trading at nearly double its value over the past 12 months.

For those with 鈥榙iamond hands鈥� who have been holding on for a long time, this feels like an 鈥業 told you so!鈥� moment. For sceptics, it looks like just another peak about to come crashing down.

So, what caused Bitcoin to rally in 2025? And could this be the time the bubble finally pops?

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Bitcoin As A 鈥楽afer鈥� Haven

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You wouldn鈥檛 think that Bitcoin would be considered a safe choice, but its latest rise isn鈥檛 coincidence, it鈥檚 down to a mix of factors driving it up.

The latest US government shutdown, as well as President Trump鈥檚 unpredictable decision making, have made investors reconsider the dollar, pushing them towards assets like Bitcoin and gold.

At the same time, government borrowing and debt has grown massively across many economies, largely driven by high rates of inflation. In the UK for example, public sector net debt amounted to 95.8% of gross domestic product in the United Kingdom during the 2024/25 financial year. In the US, in 2024, government dept was 124.30% of the country鈥檚 GDP. (Trading Economics)

What this meant was that many investors lost trust in traditional currencies, and were looking for alternatives. And with 95% of Bitcoins now in circulation and availability shrinking, it鈥檚 proving to be an attractive asset for those looking to position themselves against inflation.

Nigel Green from deVere says Bitcoin鈥檚 momentum is unlikely to fade soon. He commented:

鈥淭he price action reflects a deeper structural change in how investors view digital assets.

鈥淏itcoin is no longer a speculative corner of the market; it鈥檚 being treated as a legitimate macro instrument. Institutional capital, treasury allocations, and sovereign interest are reshaping the market鈥檚 depth and maturity,鈥� he says.

The latest surge comes amid renewed weakness in the dollar, which has fallen to multi-week lows against major currencies as uncertainty around US fiscal policy weighs on confidence. Investors have responded by increasing exposure to alternative stores of value, with Bitcoin emerging as the preferred hedge against both inflation and fiscal risk.

He adds: 鈥淓very time the dollar softens or government data is delayed, the market is reminded of the value of decentralised, borderless assets.

鈥淏itcoin鈥檚 appeal strengthens when trust in central authority is questioned, and right now, that trust is under heavy strain.鈥�

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Institutional Investors Pile In

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One of the interesting things about the latest rally is that it isn鈥檛 just driven by hype. BlackRock鈥檚 iShares Bitcoin Trust (IBIT) 鈥� a cryptocurrency ETF 鈥� took in $967 million in a single day and is now nearing $100 billion in assets under management. (Trading View).

Fidelity鈥檚 FBTC and Bitwise鈥檚 BITB also saw millions flow in, showing that Bitcoin isn鈥檛 just for those on the dark web any more, it has truly become a mainstream asset. (CoinCentral).

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Bitcoin vs Gold As A Store Of Value

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According to Matthew Sigel, Head of Digital Assets Research at VanEck, Bitcoin is now being seen as a store of value for younger investors.

In a post on X earlier this week, he argued that Bitcoin could reach up to $644,000 per coin at today鈥檚 gold price. His wider prediction was that Bitcoin is only going to become more embedded as a global asset, and could one day make up 2.5% of central bank reserves.

According to Yahoo Finance, this would price a single Bitcoin at around $2.9 million. A bullish prediction for sure 鈥� but one that might not be so out of reach.

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Bitcoin As A 鈥楬ouse of Cards鈥�

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But not everyone is convinced. Many have criticised Bitcoin as an asset, describing it as a 鈥榟ouse of cards鈥� ready to drop at any second. In fact, according to the BBC, others have argued that Bitcoin is 鈥榳orse than a Ponzi scheme鈥� 鈥� strong words indeed.

David Gerard, Journalist and crypto critic told the BBC: 鈥淚f investors treat Bitcoin as a well-regulated market, they will get burned. ETFs are regulated instruments, the way Bitcoin鈥檚 price is set is not.鈥�

Others have pointed to the fact that every big rally Bitcoin has seen in the past few years has resulted in a strong correction.

In 2017 for example, Bitcoin went from $20,000 to $4,000 鈥� down 80%.

In 2021 it dropped similar levels, down from $69,000 to $17,000.

So, could the latest rally just be history repeating itself?

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The Rise Of Bitcoin

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For all its naysayers, one thing is for sure: Bitcoin has continued to generate momentum and its latest high is just an example of that.

The question is 鈥� will it continue to go higher? Or is the latest peak just the start of another correction?

Either way, one thing is for sure: those who overlooked cryptocurrencies are learning that they may be around for the long run.