Bitcoin Hits New Highs This Month: Has It Stopped Being Seen As A Risky Asset?

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

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 ‘diamond hands’ who have been holding on for a long time, this feels like an ‘I told you so!’ 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?

Bitcoin As A ‘Safer’ Haven

You wouldn’t think that Bitcoin would be considered a safe choice, but its latest rise isn’t coincidence, it’s down to a mix of factors driving it up.

The latest US government shutdown, as well as President Trump’s 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’s 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’s proving to be an attractive asset for those looking to position themselves against inflation.

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

“The price action reflects a deeper structural change in how investors view digital assets.

“Bitcoin is no longer a speculative corner of the market; it’s being treated as a legitimate macro instrument. Institutional capital, treasury allocations, and sovereign interest are reshaping the market’s depth and maturity,” 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: “Every time the dollar softens or government data is delayed, the market is reminded of the value of decentralised, borderless assets.

“Bitcoin’s appeal strengthens when trust in central authority is questioned, and right now, that trust is under heavy strain.”

Institutional Investors Pile In

One of the interesting things about the latest rally is that it isn’t just driven by hype. BlackRock’s iShares Bitcoin Trust (IBIT) – a cryptocurrency ETF – took in $967 million in a single day and is now nearing $100 billion in assets under management. (Trading View).

Fidelity’s FBTC and Bitwise’s BITB also saw millions flow in, showing that Bitcoin isn’t just for those on the dark web any more, it has truly become a mainstream asset. (CoinCentral).

Bitcoin vs Gold As A Store Of Value

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’s 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 – but one that might not be so out of reach.

Bitcoin As A ‘House of Cards’

But not everyone is convinced. Many have criticised Bitcoin as an asset, describing it as a ‘house of cards’ ready to drop at any second. In fact, according to the BBC, others have argued that Bitcoin is ‘worse than a Ponzi scheme’ – strong words indeed.

David Gerard, Journalist and crypto critic told the BBC: “If investors treat Bitcoin as a well-regulated market, they will get burned. ETFs are regulated instruments, the way Bitcoin’s price is set is not.”

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 – 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?

The Rise Of Bitcoin

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 – 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.