By Linh Tran, Market Analyst at XS.com
August 7, 2025:
Bitcoin (BTC) continues to trade cautiously below its all-time high, as investor sentiment remains constrained by a mix of supportive and uncertain risk factors, including monetary policy, geopolitical tensions, and global trade dynamics. In the current context, BTC retains its appeal as a decentralized safe-haven asset, yet its short-term outlook still faces numerous challenges.
Although recent U.S. economic data has shown signs of a slowdown in certain sectors, expectations for a policy pivot from the Federal Reserve (Fed) remain unclear. The ISM Services PMI unexpectedly fell to 50.1, while weekly jobless claims rose to 221,000—both suggesting a cooling labor market.
However, the inconsistency in economic indicators has made hopes for a near-term policy easing by the Fed fragile. Despite growing criticism from former President Donald Trump regarding the Fed’s monetary management, Fed Chair Jerome Powell has maintained a cautious stance, emphasizing that future decisions will be data-dependent rather than politically driven. In this tug-of-war environment, safe-haven assets like Bitcoin may still hold their ground, but a sustainable uptrend would require more concrete catalysts.
On the geopolitical front, the landscape is becoming increasingly complex, significantly impacting investor behavior. Tensions in the Middle East, alongside the protracted conflict between Russia and Ukraine, show no signs of abating. Of particular concern is the approaching August 8 deadline set by President Trump for Russia to reach a ceasefire agreement. Failure to do so could trigger a new wave of U.S. sanctions, amplifying global risk sentiment.
Concurrently, Trump’s aggressive rhetoric—including threats of secondary tariffs ranging from 100% to 500% on countries continuing to import oil from Russia, and potential steep tariffs on Indian imports—is raising fears of a new wave of trade protectionism. Such moves could dampen global economic growth while accelerating capital flows into decentralized assets like Bitcoin, which are beyond the control of governments and central banks.
Fund flow data from institutional investors in early August shows a slight weakening, reflecting a cautious and wait-and-see attitude. Given that uncertainties have yet to be clearly resolved, it is understandable that professional investors are temporarily reducing their exposure to Bitcoin.
To trigger a strong and sustainable bullish trend, the market needs a clear catalyst—this could come from a policy “pivot” signal by the Fed, such as a pause in rate hikes or indications of potential cuts in the near future; a strong return of institutional capital, reflected through ETF inflow reports or transactions by major funds; or unexpected geopolitical events that cause a sudden surge in safe-haven demand.
In summary, Bitcoin’s short-term outlook is neutral, supported by resilient defensive flows and its safe-haven status in a high-risk environment. However, the lack of a clear monetary policy direction and a fragmented macroeconomic picture continue to weigh on upward momentum. Looking into the medium term, if the Fed signals a policy shift or global risks escalate significantly, Bitcoin could emerge as one of the most prominent beneficiaries among non-yielding assets.