Analysts at Bitwise pointed out that BlackRock’s IBIT and Fidelity’s FBTC are already leading the surge. Meanwhile, Donald Trump’s tariff policies caused serious market volatility by driving Bitcoin lower in the short term. However, some analysts predict that the tariffs could ultimately boost its long-term value as a hedge against a weakening US dollar. Utah is poised to become the first US state to establish a Bitcoin reserve, with bipartisan support growing at both the state and federal levels.
Bitcoin ETFs on Track for $50 Billion in 2025
Analysts are optimistic about the potential of US spot Bitcoin exchange-traded funds (ETFs). These funds saw close to $5 billion in inflows in January, setting the stage for what could be a record-breaking year for the industry.
According to Bitwise investment chief Matt Hougan, these inflows suggest that the funds could attract more than $50 billion by the end of 2025. He pointed out that January’s $4.94 billion in inflows, if annualized, will amount to approximately $59 billion. This is a big jump from the $35.2 billion recorded throughout 2024. While acknowledging that month-to-month fluctuations in flows are expected, Hougan is very confident that Bitcoin ETFs will end the year well above the $50 billion mark.
The strong performance aligns with a report from Hougan and Bitwise’s head of research, Ryan Rasmussen, in December, where they predicted that Bitcoin ETF inflows in 2025 will surpass those of the previous year. At the time of their launch in January of 2024, analysts expected total inflows to reach a maximum of $15 billion, but the actual figure was more than $33.6 billion.
Among the leading funds, BlackRock’s iShares Bitcoin Trust ETF (IBIT) dominated January’s inflows by pulling in $3.2 billion, followed by the Fidelity Wise Origin Bitcoin Fund (FBTC), which saw net inflows of almost $1.3 billion. Other funds also benefited from the trend, including the Grayscale Bitcoin Mini Trust ETF (BTC) with $398.5 million in inflows and the Bitwise Bitcoin ETF (BITB), which ranked fifth with over $125 million.
Hougan and Rasmussen believe that Bitcoin ETF inflows will accelerate even more as institutional investors increase their allocations. They pointed out that ETF adoption typically gains momentum over time, and pointed to gold ETFs as an example.
Gold ETFs saw $2.6 billion in inflows during their first year in 2004, but that number more than doubled to $5.5 billion the following year. They also noticed that major wirehouses have not yet fully integrated Bitcoin ETFs into their offerings, but when they do, the market could be exposed to trillions of dollars in additional capital.
Market Reacts to Trump Tariffs
Analysts are also still optimistic about Bitcoin’s future price prospects. Donald Trump’s latest tariff policies are poised to send Bitcoin prices soaring in the long run, according to Jeff Park, head of alpha strategies at BitWise. The financial analyst argues that these tariffs will ultimately weaken the US dollar in global currency markets and drive investors toward alternative store-of-value assets like Bitcoin. Additionally, lower yields on US government securities could also incentivize capital flows into digital assets.
Park suggests that the true objective of these tariffs is to devalue the dollar in international trade, which will correct trade imbalances and make US exports more competitive. He compared the situation to a modern version of the Plaza Accord, a 1985 agreement among major economies to weaken the US dollar.
While the long-term outlook for Bitcoin may be bullish under these conditions, the immediate market reaction to Trump’s tariffs has been very negative. Crypto markets already experienced huge declines, with Bitcoin dropping by approximately 6% over the past 24 hours. The impact has been even more severe for altcoins, as Ethereum, Solana, and XRP fell by around 19%, 8%, and 22%, respectively. Investors seem very concerned that the trade war could intensify inflationary pressures, leading them to shift toward risk-off assets as a hedge against economic uncertainty.
BTC’s price action over the past week (Source: CoinMarketCap)
The short-term strength of the US dollar further compounded the downward pressure on crypto prices. The US Dollar Currency Index (DXY), which measures the dollar’s strength relative to other fiat currencies, has been on an upward trajectory since October of 2024. While it saw a slight pullback in January, the index regained lost ground in early February. A stronger dollar and rising US yields could present additional challenges for Bitcoin and other risk-on assets in the near term, especially as investors prioritize safer, yield-generating securities over more volatile digital assets.
Utah Could Lead the US in Bitcoin Reserve Adoption
Meanwhile, Utah is on track to become the first US state to establish a Bitcoin reserve, driven by a short legislative window and strong political momentum. According to Satoshi Action Fund CEO Dennis Porter, Utah’s 45-day decision period gives it a unique advantage by making it likely to pass the legislation before any other state. In a recent interview with US Senator Cynthia Lummis, Porter stated that Utah’s political willpower and track record of passing economic development bills greatly increase its chances of success.
Dennis Porter in an interview with Cynthia Lummis (Source: YouTube)
On Jan. 28, a Utah house committee voted 8-1 in favor of a bill that will allow the state to invest public funds into Bitcoin, other cryptos with a market cap of more than $500 billion, and certain approved stablecoins. According to Porter, every bill passed by the Utah House Economic Development Committee in recent years has ultimately become law.
Arizona is the only other state that already progressed this far in the bill’s lifecycle, while several other states, including Illinois, Ohio, and Texas, have introduced similar proposals. In addition, state officials in Alabama, Florida, Kentucky, and South Dakota have publicly endorsed the idea of a Bitcoin reserve, though no bills have been introduced in these states yet.
At the federal level, Senator Lummis is making a lot of progress on her Bitcoin reserve bill, which will require bipartisan support from at least 60 senators to pass. Her proposal aims for the US government to buy 1 million Bitcoin, which is around 5% of the total supply, over the next five years. The bill also suggests repurposing the 198,100 Bitcoin that was seized from criminal activities while buying the remaining balance through Emergency Support Functions, selling a portion of the country’s $455 billion gold reserves, or a combination of both.
Asset manager VanEck estimated that if Bitcoin’s price increases at a compounded annual growth rate of 25% while US national debt rises at 5% annually, the US could reduce its national debt by 35% by 2049. For now, Bitcoin’s role in government reserves is becoming an increasingly serious policy consideration.
This article was originally Posted on Coinpaper.com
