What Drove BTC and Crypto in 2025?

Crypto markets are often explained through narratives. Political developments, regulatory headlines, institutional adoption and cycle-based expectations dominate the price action during volatile periods.

These narratives influence positioning and sentiment, but over the past year, price sustainability has been dictated more by measurable capital flows, liquidity conditions and onchain behavior than by headlines themselves.

Key takeaways:

• Bitcoin’s 56% rally after the US election aligned with a sharp rise in futures open interest, but weak spot follow-through limited the trend’s duration.

• BTC rallied when spot ETF inflows were sustained and stalled when flows slowed or turned negative, showing ETFs were demand-sensitive, not a backstop.

• A 50% drop in stablecoin exchange inflows reduced available buying power, making narrative-driven rallies fragile.

Narrative-driven rallies move fast but fade quickly

Narratives act as accelerants rather than primary drivers. Political events, especially pro-crypto leadership changes, triggered rapid repricing for Bitcoin in 2024, with the US election cycle providing a clear example.

From March through October 2024, Bitcoin (BTC) remained range-bound between $50,000 and $74,000 despite recurring bullish headlines. That regime shifted in Q4 as US President Donald Trump’s potential election victory was priced in. In the week leading up to the Nov. 4 election result, Bitcoin retraced roughly 8% amid pre-event de-risking. Following the confirmation, BTC rallied 56% over the next 42 days, breaking above $100,000.

The move coincided with a sharp expansion in futures positioning, with open interest nearly doubling in Q4 after remaining capped for most of the year. However, follow-through proved limited.

Despite setting new highs, Bitcoin struggled to sustain momentum. Spot demand failed to accelerate alongside leverage, leaving the market vulnerable once positioning became crowded. The takeaway is not that narratives are irrelevant, but that they primarily influence positioning rather than capital commitment.

Spot ETF flows highlighted strong demand

Spot Bitcoin ETFs represented one of the few catalysts where the narrative aligned with data. US spot ETFs recorded roughly $35 billion in net inflows in 2024, followed by about $22 billion in 2025.

Bitcoin price tracked these flows closely. In Q1 2024, over $13 billion in inflows coincided with Bitcoin’s rally from $42,000 to $73,000. As inflows slowed after Q1, Bitcoin entered a prolonged consolidation through October. The relationship re-emerged in late 2024, when nearly $22 billion in inflows between October and January accompanied a move from $70,000 to $102,000.

Contrarily, during drawdowns, ETF flows periodically turned negative, indicating they were not a buyer of last resort. The inference was that spot ETFs mattered because they translated narrative into measurable demand, but only while inflows remained persistent. When flows slowed, price momentum also faded.

Liquidity remains a dominant variable

Liquidity, specifically deployable capital, is one of the clearest drivers of price behavior. Stablecoin exchange inflows served as a proxy for available buying power.

When stablecoin inflows rise, markets can absorb supply and sustain trends, as seen during Q4 2024–Q1 2025. When inflows contract, rallies become fragile. From recent highs, stablecoin inflows declined by roughly 50%, signaling reduced buying capacity.

In lower-liquidity regimes, narrative-driven rallies tend to fade quickly. Price can still move on narratives or positioning, but without incremental capital, breakouts struggle to extend, and corrections become more likely. 

Related: Did Bitcoin’s 4-year cycle break, and is the bull market really over?

The inability of bullish narratives to sustain price in 2025 is further explained by larger allocation dynamics and on-chain supply. Cointelegraph reported that the Bitcoin-to-gold ratio fell from roughly 40 ounces per BTC in December 2024 to around 20 ounces by Q4 2025. This reflected a shift toward defensive assets amid elevated real yields of 1.8% in Q2, highlighting gold’s decoupling from traditional yield dynamics.

At the same time, onchain data showed persistent distribution. Glassnode data indicated long-term holders realized over $1 billion per day in profits on a seven-day average during July, one of the largest profit-taking phases on record.

Elevated real yields, correlation to equities and sustained long-term holder selling increased Bitcoin’s opportunity cost and capped its price expansion in H2 2025.

The past year made one point clear: Narratives move prices, but liquidity moves markets. Headlines create urgency and volatility, but sustainable trends require capital, improving macroeconomic conditions and spot-led demand.

Related: The Bitcoin-to-gold ratio fell 50% in 2025: Here’s why

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