When bitcoin smashed through $120,000 in July 2025, seasoned crypto veterans felt a familiar rush. The world’s largest cryptocurrency had been flirting with six‑figure levels for months, but its surge past $120,000 and climb to an all-time high of nearly $123,153, according to Binance data, still stunned the markets.
The move followed a series of record highs earlier that week and capped a 3 percent daily jump and a 12 percent weekly gain. Bitcoin’s market capitalisation now rivals the GDP of midsize nations, and the total crypto market is worth around $3.8 trillion reuters.com, making this more than a speculative curiosity.
Many headlines framed the rally as another case of “digital gold” fever. Yet a closer look reveals that 2025’s boom is fundamentally different from the bubbles of 2017 or 2021. Rather than wild retail speculation alone, a confluence of institutional flows, regulatory breakthroughs, macro‑economic shocks and geopolitical manoeuvring drove the run‑up.
Understanding these drivers is crucial because it illustrates how cryptocurrency markets are maturing and where they remain precariously vulnerable.
From halving hangover to new highs: a 2025 timeline
Bitcoin entered 2025 with momentum, buoyed by the launch of U.S. spot bitcoin ETFs. The return of Donald Trump to the White House further electrified crypto believers. According to Amberdata’s Q1 2025 market report, bitcoin briefly touched highs near $109,000 following the inauguration but soon corrected amid macro uncertainty and a security breach at Bybit.
The report noted that U.S. exchange‑traded funds (ETFs) had seen net inflows of $4.5 billion in January but then recorded outflows when volatility spiked blog.amberdata.io.
MicroStrategy (renamed Strategy Inc.) responded by doubling down: it bought roughly 11,000 BTC in the first quarter, raising its holdings to around 461,000 coins. These early weeks set the stage for the “institutional vs. retail” narrative that would dominate the year.
In May, bitcoin again broke records. On 21 May 2025 it climbed to $109,760.08 – its highest level of the year up to that point – as risk sentiment improved. Reuters reported that the rally was fuelled by easing trade tensions between the United States and China and a Moody’s downgrade of U.S. sovereign debt, which pushed investors out of dollars and into alternative stores of value.
Antoni Trenchev, co‑founder of the trading platform Nexo, called it “blue sky territory” driven by institutional momentum and a favourable U.S. regulatory environment. At the time, analysts were already whispering about $150,000 targets, according to Reuters.
By early July, momentum returned with a vengeance. Reuters observed that bitcoin’s surge to a new record was propelled not by leverage or meme‑stocks but by heavy flows into ETFs and rising corporate treasury allocations. Open interest in bitcoin futures climbed to a record $57.4 billion while funding costs remaining moderate, signalling that longer‑term investors rather than leveraged speculators were driving the rally.
Glassnode data showed that the estimated leverage ratio in futures markets fell to 0.25 from 0.32 at the start of 2025, meaning positions were backed by more real capital and less borrowed money. In this sense, 2025’s bull run looked healthier than previous cycles.
The euphoric breakout came on 14 July, dubbed “Crypto Week” in Washington. A Reuters report captured the mood: bitcoin crossed $120,000 for the first time on optimism over upcoming U.S. House debates on digital asset regulation, extending its year‑to‑date gains to about 30%. Fortune noted that the price peaked near $123,000, jumping about 3% on the day and 12% for the week.
ETFs were the star of the show. CoinShares data cited by Fortune indicated that BlackRock’s bitcoin fund alone attracted more than $2.4 billion in inflows in just one week, while total crypto ETF inflows hit $3.7 billion.
This was the second-largest week on record for crypto ETF inflows, according to CoinShares, and suggested that major Wall Street investors were piling in.
At the same time, U.S. politicians were signalling a sea‑change in attitude. President Trump declared himself the “crypto president.”
The House prepared to vote on the GENIUS Act (establishing a framework for payment stablecoins), the CLARITY Act (defining jurisdiction between the Securities and Exchange Commission and Commodity Futures Trading Commission), and an anti‑CBDC bill to ban a retail central‑bank digital currency.
The House committee’s press release promised that the week of 14 July would be “Crypto Week” and that Congress would consider these bills to make America the crypto capital of the world financialservices.house.gov.
Institutional flows versus retail FOMO
If there’s one mantra repeated by professional traders this year, it’s that “this rally is different.” Reuters explained why: analysts believe the current surge has been driven more by institutional demand than retail speculation. ETFs have made a strong start to July, attracting $3.4 billion in inflows, including a record $2.2 billion over just two days.
Those flows are typically more stable because institutions invest with longer time horizons and are less prone to panic selling. Glassnode’s data on futures positioning further underscores this point – lower leverage ratios and modest funding rates suggest a calmer market with fewer gamblers.
At the same time, corporate treasuries have become a significant source of demand. Strategy Inc., the software firm formerly known as MicroStrategy, reported second‑quarter earnings showing operating earnings of $14 billion and net income of $10 billion thanks largely to a 30% rise in bitcoin prices strategy.com
The company held 628,791 BTC by the end of July, making it one of the largest private holders. Reuters later noted that companies holding bitcoin as part of their corporate treasury, such as Strategy and GameStop, may represent a larger source of demand than traditional investors like pension funds or endowments.
Since July 2024, public companies have increased their bitcoin holdings by 120%, now owning about 859,000 BTC (roughly 4% of total supply). With corporate share prices often soaring in tandem with bitcoin, some firms have even issued stock to fund more purchases.
Institutional enthusiasm should not blind us to the limits of current adoption, however. Another Reuters piece cautioned that less than 5% of spot bitcoin ETF assets were held by long‑term investors like pensions and endowments, while 10–15% were owned by hedge funds or wealth managers. The bulk of ETF ownership remains retail..
Vanda Research’s estimates show that retail buyers loaded up on crypto ETFs when prices surged after Trump’s election and again during the June–July rally. In other words, the line between institutional and retail demand is still blurry. Wealth managers often buy ETF shares on behalf of high‑net‑worth clients, and hedge funds trade them actively. If retail enthusiasm cools, these flows could reverse quickly.
Regulatory, legal and political catalysts
Much of Bitcoin’s 2025 story revolves around regulation. The GENIUS Act, short for “Guarding and Encouraging the Nation’s Investment and Uplifting of Digital Assets,” establishes a regulatory framework for payment stablecoins. The law, summarised by the law firm Jones Day, subjects issuers with more than $10 billion in circulation to federal oversight, clarifies that payment stablecoins are neither securities nor commodities, and bans algorithmic stablecoins.
The act also requires issuers to maintain 1:1 reserves, prohibits mixing customer funds, and mandates enhanced consumer disclosures. The CLARITY Act, meanwhile, creates a provisional registration system for token issuers, splits regulatory jurisdiction between the SEC and CFTC and provides a safe harbour for decentralized‑finance participants.
When the House passed these bills with bipartisan support in mid‑July, analysts saw it as the most significant legislative progress for U.S. crypto since the infrastructure bill.
Beyond these bills, Congress also considered the Anti‑CBDC Surveillance State Act. House leaders argued that creating a retail central‑bank digital currency would threaten Americans’ financial privacy, and they pledged to block it.
In effect, the Republican‑controlled House embraced private‑sector crypto innovation while warning against government‑controlled digital money. That political stance dovetails with President Trump’s pro‑bitcoin rhetoric.
In July he described himself as “the crypto president” and teased the idea of establishing a Strategic Bitcoin Reserve – a national hoard of seized bitcoins akin to the gold reserves at Fort Knox. Regulatory clarity has also arrived from agencies.
Early in the year, the Office of the Comptroller of the Currency released guidance allowing federally chartered banks to custody digital assets, a move that opens the door to institutional adoption.
The Federal Reserve’s June meeting minutes suggested that “some reduction in the target range for the federal funds rate this year would likely be appropriate”. That hint of rate cuts helped fuel demand for risk assets and was cited by analysts like CoinShares’ James Butterfill as a key driver behind July’s ETF inflows. When the House took up the CLARITY and GENIUS acts days later, the narrative that Washington was turning crypto‑friendly reached fever pitch.
Macroeconomic currents: tariffs, inflation and trade deals
The macro backdrop has been equally consequential. Bitcoin rallied in mid‑May when the United States and China dialled back tariff threats and Moody’s cut U.S. sovereign debt, pressuring the dollar and making alternative assets attractive.
In early July, Finance Magnates reported that Trump struck a trade deal with the European Union that reduced tariffs on key goods, calming markets and fueling risk appetite. The same article argued that optimism about rate cuts and political pressure on the Federal Reserve further boosted crypto prices.
With the U.S. economy cooling and inflation ticking higher due to tariff‑induced price increases, investors began treating bitcoin as a hedge against both a falling dollar and surging consumer prices.
Another macro narrative involves global de‑dollarisation. BRICS nations (Brazil, Russia, India, China and South Africa) have discussed building a blockchain‑based payment network and perhaps even a shared currency.
While details remain murky, such initiatives underscore the desire among major economies to circumvent U.S. sanctions and reduce reliance on the dollar. In that context, some investors view bitcoin as a neutral settlement asset – a digital analog to gold that no single nation controls.
Although these geopolitical developments don’t directly push prices day‑to‑day, they contribute to the long‑term story that digital assets are a hedge against currency debasement and geopolitical fragmentation.
Whales, on‑chain signals and profit‑taking
Even as institutional flows supported the rally, on-chain analytics revealed subtle warning signs. BlockchainReporter noted that whale inflows, meaning large holders moving coins to exchanges, surged by $17 billion over four days in mid-July as bitcoin approached $120,000. The 30‑day average of whale inflows jumped from $28 billion to $45 billion, the highest since early 2024.
Historically, similar inflow spikes have preceded market tops, suggesting that big players were preparing to sell or take profits. CryptoPotato observed that “Coin Days Destroyed” (which measures the movement of older coins) and Net Realised Profit and Loss both spiked.
Realised profits exceeded $4 billion, marking the highest level since early in the second quarter, and suggesting that whales were locking in gains. The data also highlighted resistance levels near $124,000 and $136,000, with support around $113,000, $111,000, and $101,000. Such technical zones matter because they often serve as psychological thresholds in thinly traded markets.
Cointelegraph highlighted dramatic whale movements. On 17 July, a long inactive address holding 40,192 BTC, which were mined in 2011, transferred its entire balance to a new wallet. That whale had already sent another 40,009 BTC to Galaxy Digital days earlier, totalling nearly $5 billion.
Analysts speculated that these moves, combined with other whales taking profits, contributed to bitcoin’s pullback from $122,000. Another Cointelegraph analysis noted that Binance’s Whale Activity Score spiked when 1,800 BTC worth over $1 million each were deposited to the exchange.
Long‑term holders were realising profits and more than 98 percent of the supply was in profit, raising the risk of a sell‑off. The article warned that bitcoin could drop to fill a CME futures gap around $114,400 or even fall toward $108,000 if support fails.
These on‑chain signals didn’t necessarily mean a crash was imminent. But they reminded investors that bull markets are often punctuated by sharp corrections and that whales can influence prices by unlocking dormant coins.
Understanding this dynamic helps explain why bitcoin briefly dropped back to around $116,000 later in July and then consolidated between $116,000 and $119,000.
For those who believe in efficient markets, such volatility may simply reflect healthy profit‑taking. For others, it exposes a structural weakness: a small number of very large holders still control enough coins to sway prices.
Retail psychology and the fear‑of‑missing‑out
Beyond whales and institutions lies the emotional core of any crypto rally: retail investors. As bitcoin broke through one round number after another, FOMO kicked in. Social media buzzed with calls for $150,000 and even $200,000 price targets. Yet professional analysts remained cautious.
Vanda Research told Reuters that retail purchases of crypto ETFs and crypto‑linked stocks corresponded closely with run‑ups in prices, implying that retail momentum still drives short‑term swings. A spike in Coinbase traffic, trending hashtags and the resurgence of crypto‑centric gaming tokens were all anecdotal indicators that a new cohort of investors was piling in.
This exuberance carries risks. As of July 2025, more than 98 percent of the bitcoin supply was in profit, leaving little “dry powder” of underwater holders to provide a floor in the event of a sell‑off. On‑chain metrics like Coin Days Destroyed and Net Realised Profit and Loss signalled that some long‑term holders were exiting positions.
If prices were to fall sharply, many of the late‑cycle retail buyers could panic and exacerbate the decline. That dynamic played out during previous bull markets and remains a significant risk.
The bigger picture: geopolitics and the digital gold narrative
Bitcoin’s rise cannot be divorced from broader geopolitical currents. As global power centres fragment, the idea of a neutral, censorship‑resistant asset becomes increasingly appealing. Countries like Russia and China have accelerated discussions about alternatives to SWIFT and the dollar.
The BRICS bloc is reportedly working on a cross-border payment system that could use blockchain technology to facilitate trade outside the U.S. financial system. Even if these initiatives are still years away from becoming reality, they contribute to the growing narrative that bitcoin, with its fixed supply and decentralized network, serves as a hedge against currency debasement and geopolitical instability.
Meanwhile, states and municipalities within the United States are embracing the “digital gold” ethos. Reports earlier in the year described how several state legislatures proposed allocating portions of their treasuries to bitcoin; Oklahoma’s Strategic Bitcoin Reserve Act, for instance, would permit up to 10% of surplus funds to be held in BTC.
While such bills remain experimental, they illustrate a shift from viewing cryptocurrency as a fringe asset to treating it as a legitimate part of public finance. Internationally, sovereign wealth funds like Abu Dhabi’s Mubadala and the State of Wisconsin Investment Board have disclosed positions in bitcoin ETFs, further legitimising the asset class.
What could derail the rally?
Despite the bullish backdrop, several fault lines could end the party abruptly. First, regulatory initiatives may not progress smoothly. The GENIUS and CLARITY acts still require Senate approval and could be diluted or derailed by partisan wrangling.
In the U.S., upcoming presidential and congressional elections inject uncertainty; while Trump is presently pro‑crypto, a change in administration could shift the tone. Globally, regulators may not be as friendly. The European Union continues to tighten rules through its Markets in Crypto Assets (MiCA) framework, and China still bans crypto trading.
Second, the Federal Reserve’s balancing act remains delicate. If inflation proves stickier than expected and the Fed delays rate cuts, risk assets could suffer. Conversely, aggressive rate cuts could weaken the dollar further and spur inflation, keeping bitcoin attractive. Markets are essentially betting on a Goldilocks scenario; any deviation could trigger violent repricing.
Third, corporate treasuries’ increasing exposure is a double‑edged sword. Reuters cautioned that if bitcoin falls below $90,000, about half of corporate treasury holders could find themselves underwater. That would put pressure on executives and could prompt forced selling to shore up balance sheets. In effect, the same corporate adoption that drives rallies may amplify downturns.
Fourth, whales remain a wild card. The sudden transfer of tens of thousands of coins from dormant wallets shows that early adopters still control vast pools of bitcoin. Their decisions to sell, whether driven by diversification, philanthropic goals, or regulatory pressure, can have a significant impact on prices. On-chain data indicating elevated whale inflows and signs of profit taking should serve as a caution against complacency.
A balanced outlook
Where does bitcoin go from here? Predictions are cheap and often wrong, but the signals we have tracked offer clues. On one hand, institutional adoption is accelerating, regulatory clarity is improving, macro conditions remain supportive, and the narrative of digital gold is stronger than ever.
Analysts like Nexo’s Antoni Trenchev maintain targets as high as $150,000 for year‑end. CoinShares’ Butterfill says political developments and expected rate cuts underpin continued demand. Corporate treasuries and sovereign funds are still buying, and the U.S. House is laying the groundwork for a comprehensive digital asset framework.
On the other hand, the rally has drawn in speculators and whales are taking profits. On‑chain signals warn of potential corrections; an overly rapid price spike can spark blow‑offs similar to past cycles. Regulatory progress could stall, and macro conditions might deteriorate. The maturing of bitcoin does not mean an end to volatility; it simply changes the cast of characters who move the market.
The key takeaway for investors
The surge to $120,000 is not a fluke, and it’s not just a meme‑driven frenzy. It reflects bitcoin’s evolution into a quasi‑institutional asset intertwined with macroeconomics, politics and corporate finance. But the very forces propelling it higher – institutional FOMO, government policy, whale behaviour and macro shock therapy – also contain seeds of instability.
Investors should celebrate the maturity but resist complacency. In the world of digital assets, fortunes are made when the crowd looks the other way, and history suggests that surprises, both positive and negative, are never far behind.
