Bitcoin Hits $105K; Crypto ETF Expects 35% Growth

Bitcoin Hits $105k; Crypto ETF Issuer Expects 35% Growth

20 May 2025 at 08: 16

Reading time: 2 minutes

Cryptocurrencies regained ground on Monday after a choppy start to trading, reflecting a broader recovery in risk assets as traders weighed the impact of Moody's downgrade of U.S. Treasuries.

Bitcoin Ethereum cryptocurrency staged a strong rebound after dropping to a low of $102.000 in the early US session, following a record close of $106.600. The largest cryptocurrency by market cap climbed back to $105.000 in afternoon trading, up 0,4% over 24 hours. Ether rose 1,2% to reclaim the $2.500 level. DeFi lending platform Aave outperformed most major altcoins, while the majority of the CoinDesk 20 Index remained under pressure despite rallying from their daily lows. Solana, Avalanche and Polkadot saw their value drop by 2% to 3%.

The recovery also extended to US stocks, with the S&P 500 and Nasdaq erasing their morning losses. The initial pullback in crypto and stocks followed Moody’s downgrade of the US credit rating, announced on Friday. The move disrupted bond markets, sending 30-year Treasury yields above 5% and 10-year yields above 4,5%.

However, there are voices that play down the long-term impact of this downgrade on asset prices. It is suggested that, in the long run, the downgrade means little for markets. Perhaps there will be some short-term selling pressure, particularly on US Treasuries, as large institutional investors rebuild their portfolios. Many of them are required to hold assets only in AAA-rated securities.

Moody's was the last of the three major ratings agencies to downgrade U.S. debt, which was no surprise; it had been coming for some time. That's why it seems like stock investors aren't paying much attention.

Bitcoin aims for $138K this year

Meanwhile, while BTC is hovering just below its January record highs, digital asset ETF company 21Shares sees significant potential for this year. According to research strategist Matt Mena, Bitcoin is poised for a breakout. The current rally appears not to be driven by retail frenzy, but by a combination of structural forces, including institutional inflows, historic supply constraints, and improving macroeconomic conditions, which together suggest a more sustainable and mature path to new record highs.

Spot Bitcoin ETFs have consistently absorbed more BTC than is mined daily, further narrowing the supply. Large institutions and firms like Strategy and new entrants like Twenty One Capital are hoarding Bitcoin, while even states are considering building strategic reserves. These factors combined could push BTC to $138.500 this year, representing a roughly 35% increase for the largest crypto.

Frequently Asked Questions

How will Moody's recent downgrade affect crypto markets?
The demotion has caused initial fear in the markets, but in the long run the impact on crypto prices seems limited. Investors do not seem to attach much importance to it.

Why Did Bitcoin Rise Again After Falling?
Bitcoin has rallied due to a combination of factors, including institutional investment and improving macroeconomic conditions, which together pave the way for a potential breakout to new all-time highs.

What are the expectations for Bitcoin this year?
According to the analysis, Bitcoin could rise to $138.500 this year, driven by a tight supply and rising institutional interest.

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