Will Bitcoin go up or down next? A clear look at the bullish and bearish arguments.

 

throughAfter the sharp drop on “10.11” and the subsequent blow from the US government shutdown in November, the cryptocurrency market is already quite jittery.

What’s even more worrying is the significant disagreement among traders and institutions regarding the market’s future direction. Galaxy Digital just cut its year-end price target from $185,000 to $120,000, but JPMorgan Chase insists that Bitcoin could reach $170,000 in the next 6-12 months.

Ultimately, the biggest factor influencing the rise and fall of the crypto market right now is liquidity. When there is ample dollar liquidity, funds flow into risk assets, and Bitcoin rises; when liquidity tightens, funds flow back into Treasury bonds and cash, and Bitcoin falls. This recent US government shutdown, setting a historical record, resulted in the Treasury’s total account balance approaching $1 trillion, completely locking up liquidity and impacting almost all global financial markets. Bitcoin is no exception. This also shows that, in fact, political factors are still largely influencing liquidity.

The Democratic Party’s landslide victory in the November 4th local elections raises questions about its implications for the 2026 midterm elections. Will the Federal Reserve cut interest rates in December? Every recent move by the White House deserves careful analysis. Every event is altering expectations regarding liquidity.

So what will Bitcoin do in 2025, which is about to end, and 2026, which is just around the corner? Who is right and who is wrong, the bulls or the bears? BlockBeats has analyzed the arguments of both sides.

What do the bears say?

Before analyzing the possibility of an upward trend, let’s hear what the bears have to say.

Democrats launch a counterattack, Trump is in a hurry

“The Democratic Party’s recent victories in several state elections are the reason for the decline in the crypto market over the past few weeks. The Democratic Party is very bad for cryptocurrencies and capitalism,” analyst borovik.eth’s view is not unfounded.

Following the presidential election and preceding the midterm elections, the United States holds several important local elections. These local elections can be seen as both a vote of approval for the Republican Party and a prelude to the midterm elections.

Meanwhile, the Republican Party suffered three consecutive defeats in state elections, while the Democratic Party achieved a complete victory.

1. Virginia Governing Council Election: Democratic candidate Abigail Spanberger won by a landslide, 15 percentage points, becoming the state’s first female governor. The Democrats not only secured the governorship but also regained three key positions: lieutenant governor, attorney general, and a reshuffling of at least 13 seats in the House of Representatives.

2. New Jersey Governing Election: Democratic candidate Mikie Sherrill became the state’s first female governor. New Jersey is a state with a large moderate electorate, but the Democrats won by 13.8 percentage points, their biggest victory since 2005.

3. California’s redrawing of electoral districts could potentially grant Democrats five new House seats and allow for the redrawing of three districts. Governor Newsom and others in California will now be Trump’s toughest opponents to the Republicans.

Newsom has consistently held the top spot on Polymarket for the 2028 Democratic presidential nomination.

4. New York City Mayoral Election: 34-year-old Democratic candidate Zohran Mamdani was easily elected, receiving over 1.03 million votes, a vote share of 52-55%. He became the first mayor in New York history born in the 1990s, the first Muslim mayor, and the first Indian-American mayor.

More importantly, New York holds special symbolic significance. Many of the votes for Mamdani came from young people who had previously supported Trump, and he was even nicknamed “Left-wing Trump.” In other words, nearly 90% of the young people in this largest city in the United States and Trump’s hometown have switched to the Democratic Party.

The staggered timing of U.S. gubernatorial and mayoral elections is intended to avoid the “pull-down effect” of federal elections, allowing local voters to focus more on local issues. Governors typically serve four-year terms, but the election year varies by state; mayors serve two to four-year terms, with more flexible election dates. However, precisely because of this staggered nature, these local elections have become important indicators of federal election trends, often foreshadowing national political directions. These governors and mayors are also a significant source of future federal candidates.

The recent sweeping victories of the Democrats in state elections have provided a strong momentum for the 2026 midterm elections, with many foreign media outlets and analysts viewing it as a harbinger of a “blue wave” similar to that of 2017. This also serves as a political warning for Trump; if he doesn’t take action, he may repeat the situation he faced during his first term, where he lost local elections in 2017 and ultimately lost control of the House of Representatives.

In American politics, the first year in office is often a honeymoon period, the second year is a period of discontent, and the following two years are typically a lame-duck period. But Trump probably didn’t expect his honeymoon to be so short, or his defeat to be so swift.

Even though he still controls both houses of Congress, Trump can’t do whatever he wants forever. The recent US government shutdown is a prime example.

The core issue of this US government shutdown can be simply stated as follows: the Senate needs 60 votes to reopen the government—this is an ironclad rule. Republicans want a Democratic vote, but the Democrats’ condition is to extend an expiring Medicare subsidy, which Trump disagrees with.

Under the leadership of Minority Leader Chuck Schumer, the Democratic Party refused to vote 14 times, showing unity like a family.

In contrast, the Republican Party is rife with infighting and division. Trump has repeatedly demanded that the rule of eliminating the 60-vote threshold be broken, but these requests have been rejected by Senate Republican leaders, who fear that abolishing the obstruction rule would backfire if the Democrats regain power. Trump is reportedly very angry about this and has verbally abused these Republican leaders.

Ultimately, the Republicans compromised, and Trump was forced to accept a package that included Democratic priorities in order to reopen the US government. This clearly demonstrates that a united Democratic Party has the ability to obstruct the Republican agenda, and Trump’s “dictatorial” control over both houses of Congress is being weakened.

This shutdown set a record for the longest in U.S. history. A large number of civil servants were unable to take leave, and many poor people were unable to receive subsidies. The resulting economic losses severely damaged the image of the Republican Party.

Americans’ discontent has once again reached a breaking point. People’s livelihood is always the most important political issue.

There is discontent with the actual decline in living standards, discontent with the widespread arrests of illegal immigrants creating a climate of fear, and discontent with the increasing divisions that cause anxiety. Millions of people from upper-middle-class backgrounds are aware that they are experiencing a decline in social class, and they are terrified by it.

Millions of people from upper-middle-class backgrounds are realizing they are experiencing social downward mobility, and they are panicking about it.

Food inflation is also a key factor; what used to cost $100 now costs $250, and the quality is worse. Just as the egg price surge was subsiding, beef, a favorite among Americans, is now facing a new wave of inflation.

The latest Consumer Price Index (CPI) released on October 24 showed that the prices of roast beef and steak rose by 18.4% and 16.6% year-on-year, respectively. According to data from the U.S. Department of Agriculture, the retail price of ground beef has surged to $6.10 per pound, a record high. Compared to three years ago, beef prices have increased by more than 50%.

In addition, coffee prices rose 18.9%, natural gas prices rose 11.7%, electricity prices rose 5.1%, and car repair costs rose 11.5%. Many young Americans burdened with debt from college are facing even greater pressure due to the further increase in the cost of living.

The 2026 US midterm elections are scheduled for November 3. The recent landslide victory of the Democrats in the 2025 gubernatorial elections has provided them with strong momentum to regain control of the House of Representatives. If the Democrats control both the House and the Senate in next year’s midterm elections, Trump will undoubtedly be hampered at every turn for the next two years, becoming a lame duck.

For the crypto market, tightening regulations could mean that funds betting on Trump’s favorable policies will have to reconsider their direction, and the downward trend may not even have to wait until the midterm elections.

A December rate cut is not a certainty.

The probability of a rate cut at the Federal Reserve meeting on December 10, which originally had a 90% chance of success, has now dropped to 65% on Polymarket (it was 51% at the time of writing).

Nick Timiraos, the Fed’s mouthpiece, said that four regional Fed presidents with voting rights (Boston Fed President Collins, St. Louis Fed President Musallem, Chicago Fed President Goolsby, and Kansas City Fed President Schmid, who voted against the October rate cut) have not actively pushed for another rate cut in December.

Federal Reserve officials are increasingly divided over a December rate cut. Hawks who had previously focused on inflation are now advocating for a pause in action after last month’s rate cut. Officials are divided on three key issues:

First, is the cost increase caused by tariffs truly a one-off event? Hawks worry that after absorbing the initial tariff costs, businesses will pass on more costs to consumers next year, further pushing up prices. Doves, on the other hand, believe that businesses’ reluctance to pass on more tariff costs to consumers so far indicates weak demand, insufficient to support inflation.

Second, is the slowdown in monthly non-farm payroll growth due to weak demand for labor from businesses, or to a labor shortage caused by reduced immigration? If it is the former, maintaining high interest rates will lead to an economic recession; if it is the latter, cutting interest rates may overstimulate demand.

Third, do interest rates still have a limiting effect on the economy? Hawks believe that after this year’s 0.5 percentage point rate cut, interest rates are at or near neutral levels, neither stimulating nor inhibiting economic growth, thus posing a significant risk of further rate cuts. Doves, on the other hand, believe that interest rates still have a limiting effect, and that rate cuts can support the recovery of the labor market without triggering renewed inflation.

In August, Powell attempted to quell the debate in a speech at Jackson Hole, Wyoming, arguing that the impact of tariffs was only temporary and that the weakness in the labor market reflected weak demand, thus taking a dovish stance and supporting interest rate cuts. Data released a few weeks later confirmed his view: the economic slowdown had effectively halted new job creation.

However, at the meeting on October 29, the hawkish voices rose again.

Jeff Schmid, president of the Federal Reserve Bank of Kansas City, opposed a rate cut that month. Several other non-voting Federal Reserve bank presidents, including Beth Hammack, president of the Federal Reserve Bank of Cleveland, and Lorie Logan, president of the Federal Reserve Bank of Dallas, also publicly expressed their opposition to the rate cut.

At the press conference following the meeting, Powell stated bluntly that a December rate cut was not a certainty. Therefore, it remains difficult to predict whether the Federal Reserve will cut rates again at its meeting on December 9-10.

More importantly, Federal Reserve Chairman Jerome Powell’s term is also coming to an end. His term will end on May 15, 2026, and most analysts believe that Powell will not risk appearing panicked, and maintaining the status quo is the safest option.

The dual uncertainties of political and monetary policy have also put the crypto market under stress.

Renowned analyst Willy Woo has put forward a profound view: the two major cyclical forces that have driven Bitcoin’s rise in the past are gradually disappearing, and what will truly determine the market trend in the future will not be halvings or liquidity, but the macroeconomy itself.

For the past decade or so, Bitcoin’s history has been almost entirely built on the “overlapping effect of two four-year cycles”: the Bitcoin halving cycle itself and the global liquidity (M2) cycle. Whenever the narrative of supply contraction brought about by halvings met with the liquidity expansion driven by central bank injections, a strong resonance was formed—this was the underlying driving force behind the past two bull markets. But now, with the cycle misaligned, this resonance has disappeared, leaving only liquidity acting alone.

“The two last two major economic recessions, the bursting of the dot-com bubble in 2001 and the financial crisis in 2008, both occurred before Bitcoin was created. In other words, we have never seen how Bitcoin would perform during a full economic recession.”

Therefore, Willy Woo suggests that the era of bull markets driven by the resonance of two cycles has ended. Bitcoin has lost its “natural accelerator” and its upward momentum may be weaker and more dependent on external factors. Bitcoin’s current trend may be telling us in advance that “the top has been reached.”

Galaxy Digital also recently lowered its Bitcoin price target. They recently reduced their year-end target from $185,000 to $120,000, citing large-scale selling by major investors, fund rotation into assets such as gold and AI, and leveraged liquidations. Galaxy’s head of research, Alex Thorn, described this period as a “mature era,” characterized by lower volatility and institutional absorption dominating the market.

What do the bulls say?

Of course, not everyone is pessimistic.

The US government opened the floodgates to release water.

Real Vision CEO Raoul Pal is optimistic that the crypto market will soon recover from the ongoing turmoil.

“The road to Valhalla is very close,” Pal said. Simply put, Pal believes the crypto industry will soon begin an upward trend after a series of market crashes.

Pal’s logic is this: the US government shutdown did indeed cause a liquidity crunch. Tax revenue was still flowing in, but spending was at zero. The Treasury General Account (TGA) balance was approaching $1 trillion, which was the main reason for the liquidity crunch and Bitcoin’s underperformance compared to Treasury bonds.

But this is precisely the signal of a turning point.

In response, the Federal Reserve has been forced to restart its overnight repo operations, planning to inject nearly $30 billion in liquidity into the market.

More importantly, the next phase: once the government shutdown ends, the Treasury will begin spending $250 billion to $350 billion in the coming months.

When this happens, quantitative tightening ends, and balance sheets technically expand. This means that crypto tracks will gain free liquidity.

Historical trends also support this assessment. When the Treasury replenishes reserves and liquidity becomes extremely tight, it often foreshadows an impending reversal. In other words, the current pain is the darkness before dawn.

Raoul Pal also made an important point: “The four-year cycle is now a five-year cycle… Bitcoin should peak in 2026. Probably in the second quarter.”

This assessment directly addresses the concerns of bears regarding the “disappearance of cyclical resonance.”

Pal’s view is that the cycle hasn’t disappeared, but rather extended. If the peak is in the second quarter of 2026, then now is actually a good time to buy.

Moreover, even if liquidity alone were to drive up Bitcoin’s price—provided that liquidity is actually expanding—it would be enough. And the massive spending by governments after reopening is precisely the beginning of this liquidity expansion.

BitMEX co-founder Arthur Hayes echoed similar sentiments. He linked Bitcoin’s decline to an 8% drop in dollar liquidity since July, arguing that once the Treasury balance decreases after the shutdown, dollar liquidity will rebound, driving BTC higher.

Hayes provides a more in-depth analysis in his latest Substack post, ” Hallelujah “: The US will issue approximately $2 trillion in new debt annually over the next few years, while also rolling over existing debt. As the purchasing power of the private sector and foreign central banks declines, RV funds will increasingly rely on SRF financing. This will force the Federal Reserve to continuously expand its balance sheet, resulting in a “hidden QE” effect. Ultimately, the dollar supply will continue to expand, which is precisely the fuel for Bitcoin’s price increase.

Therefore, Arthur believes that the current weakness in the crypto market is merely a temporary lock-up of liquidity by the Treasury—during the government shutdown, the Treasury absorbed dollar liquidity through bond issuance but has not yet released it for spending. When the government reopens, these funds will flow back into the market, and liquidity will ease again. Meanwhile, the market may mistakenly believe this is the peak and sell off Bitcoin, but that would be a “major misjudgment.” The real bull market will reignite from the moment “hidden QE” begins.

JPMorgan analysts remain bullish on Bitcoin, predicting that the price could climb to $170,000 within the next 6 to 12 months as leverage in the futures market resets. This prediction is based on a technical correction.

The decline over the past few weeks was largely due to leverage liquidation. Once the leverage reset is complete and the drag from excessive leverage is gone, Bitcoin will be more likely to rise.

The CLARITY Act is moving at breakneck speed.

The second important reason for the bullish stance is the improving regulatory environment. At the heart of this improvement is the Clarity Act.

Real Vision CEO Raoul Pal repeatedly emphasized that establishing favorable crypto regulations will provide strong support for the market. His logic is simple: once the CLARITY Act is passed, banks and brokerages will receive the regulatory green light to massively custody and trade spot crypto ETFs.

The Clarity Act passed the House of Representatives on July 17, and it was bipartisan—78 Democratic members voted in favor. This number is crucial, demonstrating that the bill is not merely Republican wishful thinking, but has a bipartisan base.

Two days earlier, on November 10, the Senate Agriculture Committee released a bipartisan draft bill for discussion. This timing is significant—it marks the first major legislative development since the government shutdown ended.

The release was made by the Senate Agriculture, Nutrition, and Forestry Committee, spearheaded by Chairman John Boozman (Arkansas Republican) and senior member Cory Booker (New Jersey Democrat). Note that this is another bipartisan collaboration.

Market observers expect the bill to pass by the end of the fourth quarter of 2025. The White House has a clearer goal: to complete the legislation by the end of 2025.

Currently, on the polymarket forum, the probability of the Clarity Act (HR3633) passing in the question “What bills will be enacted in 2025?” is 41%.

From July to November, it took only four months to move from the House of Representatives to the Senate for discussion. This speed is rare in the history of US legislation.

What exactly did this bill change? The most crucial point is that it transfers the main regulatory power over the spot digital commodities market to the CFTC, significantly reducing the SEC’s authority.

Specifically, the CFTC has gained exclusive jurisdiction over the spot digital commodities market, including mainstream assets such as Bitcoin and Ethereum. This means the CFTC can regulate digital commodities exchanges, brokers, dealers, and custodians, and set anti-manipulation standards, system safeguards, and risk management requirements. Correspondingly, the SEC has lost its regulatory authority over securities-related digital assets. The previous uncertainty of “regulation through enforcement” will be completely ended.

The bill handles stablecoins more subtly. It creates a unique status for “permitted payment stablecoins”: the CFTC’s regulatory scope will only oversee the execution, solicitation, and acceptance of stablecoin transactions on registered platforms. It has no regulatory authority over the operations, reserves, or issuance processes of stablecoin issuers. This complements the GENIUS Act (which focuses on issuer licensing and reserves), avoiding regulatory conflicts.

This design is clever. It separates the trading and issuance processes of stablecoins for regulation, avoiding the awkward situation of an asset being monitored by two institutions simultaneously. The impact on market structure is direct: platforms must register with the CFTC to conduct stablecoin spot trading, but issuers retain autonomy, avoiding over-regulation.

This is a major boon for major stablecoins, such as Ripple’s RLUSD, Circle’s USDC, and Tether’s USDT.

Bauer’s countdown

Powell, who doesn’t listen to Trump, is entering the final countdown of his term, which ends on May 15, 2026, leaving him with six months to go.

In the coming months, the selection of the Federal Reserve Chair will be a key focus for the market. The government has narrowed down the list of candidates but has not yet announced a specific nominee.

Currently, the most likely candidate on Polymarket is Kevin Hassett, the White House National Economic Council Director, who has a close relationship with President Trump. Due to his position, he analyzes economic data for Trump almost daily and is even referred to by Trump as his “economics professor.” Both share similar policy philosophies; Hassett is a thorough dove and has long advocated for interest rate cuts to stimulate economic growth.

During Trump’s first term, Hassett repeatedly criticized Powell’s interest rate hike policy, arguing that the Fed’s overly aggressive tightening of monetary policy would harm the economic recovery.

This year, the Federal Reserve has faced unprecedented political pressure from the Trump administration for not cutting interest rates more aggressively. This political pressure is changing the power balance within the Federal Reserve, and a recent example is a prime example.

On November 13, according to Nick Timiraos, a mouthpiece for the Federal Reserve, Atlanta Federal Reserve President Raphael Bostic suddenly announced that he would retire when his current five-year term expires at the end of February next year. This announcement comes at a somewhat delicate time, coinciding with a potential interest rate cut in December.

After all, Bostic was one of the most hawkish generals within the Federal Reserve, and his departure will weaken the hawkish voices within the Fed during this politically sensitive period.

Futures market pricing indicates that the Federal Reserve will cut interest rates at least four times by 25 basis points each time by the end of 2026. If Hassett does become the Fed chairman, coupled with the gradual decline of hawkish voices within the Fed, there is no doubt that the speed and magnitude of rate cuts will exceed market expectations. Liquidity will be significantly released, and risk assets will experience a strong surge.

This is a huge positive for the crypto market.

Another key political event is Trump’s efforts to mend fences with former allies. The signal was on November 4th when Trump announced the re-nomination of Elon Musk’s friend, Isaacman, as NASA administrator.

After the news was released, Elon Musk, a friend of Isaacman and CEO of SpaceX, quickly retweeted it.

Trump first nominated Isaacman as NASA administrator last December, but withdrew the nomination in May after a heated argument with Musk over the “Beautiful Bill,” appointing Transportation Secretary Sean Duffy as acting NASA administrator—a clear warning to Musk. The two then engaged in a war of words, resulting in a dramatic “breakup of the century.”

Starting in August of this year, a turning point emerged. According to the Wall Street Journal, during the consideration of launching the “American Party,” part of Musk’s focus was on maintaining his relationship with Vice President Vance. Sources said that Musk had been in contact with Vance in recent weeks. He admitted to aides that if he continued to pursue the plan to form a political party, it would damage his relationship with Vance. The report said that Musk and his aides had informed close associates that if Vance decided to run for president in 2028, Musk would consider using his vast financial resources to support him, which was indeed the best solution after Musk returned to rational thinking.

In September, media outlets captured images of Trump and Musk appearing together and shaking hands at Charlie Kirk’s memorial service, indicating a warming of their relationship. Indeed, multiple US media outlets reported that as Musk’s relationship with the Republican Party improved, Isaacman seemed to be gradually returning to discussions regarding his nomination as NASA administrator.

The re-nomination on November 4th is another signal of reconciliation, and the timing is also very delicate, coming right after the Democratic Party’s landslide victory in the local elections.

Those who are bearish see Trump’s approval ratings declining, Republican compromises, and a bleak outlook for 2026. Those who are bullish see the Republicans consolidating their power, repairing alliances, preparing to push through key legislation before the end of the year, and continuing their push for the 2026 midterm elections.

Uncertainty itself is the greatest certainty.

How high will Bitcoin go? Traders and analysts have given varying answers, ranging from $120,000 to $170,000.

After reviewing all the arguments presented by both the bulls and bears, three points can be summarized.

First, in the short term, look at liquidity; in the medium term, look at regulation; and in the long term, look at the economic cycle.

Looking only at the next few weeks, the recent end of the government shutdown, continued tight liquidity, and heightened political uncertainty certainly pose challenges. The Galaxy’s year-end target of $120,000 might be a relatively conservative but realistic expectation.

However, looking at the next six to twelve months, the combination of massive government spending, the implementation of the Clarity Act, and the release of liquidity could push prices closer to $170,000. JPMorgan Chase’s assessment has its merits.

As for Raoul Pal’s prediction of a peak in the second quarter of 2026, that’s a longer-term cyclical assessment. If this assumption holds true—a five-year cycle replacing a four-year cycle—now would actually be a good time to invest.

The key is to clearly understand your trading timeframe. Short-term traders should focus on liquidity data and government spending progress, medium-term holders should keep an eye on the Clarity Act and the Federal Reserve leadership transition, and long-term investors should consider business cycles and the fundamental nature of Bitcoin.

Second, the political risks have been overestimated, but they cannot be completely ignored.

The Democratic Party’s victory in the local elections does pose a threat to the 2026 midterm elections. But there is still a full year until the midterm elections.

A lot can happen in politics in a year. Trump and Musk have reconciled, Republicans may push through more favorable legislation before the end of the year, and improving economic data could also shift public opinion.

More importantly, even if Democrats regain control of Congress in 2026, the key crypto regulatory framework, if established in 2025, is unlikely to be overturned in the short term. The CLARITY Act received support from 78 Democratic members of the House, demonstrating its bipartisan base.

A key characteristic of American politics is that “a large ship is difficult to turn around.” Once a regulatory framework is established, it is difficult to completely reverse it in the short term, even with a change of ruling party.

Therefore, the logic of betting that a Democratic victory will lead to the demise of crypto is oversimplified. Political risks exist, but they are not as fatal as the market imagines.

What we should really be wary of is the political uncertainty itself. If the market remains uncertain about who will win for an extended period, funds will choose to remain on the sidelines. This wait-and-see attitude can be more damaging to the market than any potential victory for either side.

Third, the biggest risk is not politics, but economic recession.

The “business cycle” concerns raised by the bears are actually the most noteworthy risks.

If the US economy really enters a recession, will Bitcoin plummet like tech stocks, or will it become a safe-haven asset like gold?

There is no historical answer to this question because Bitcoin has never experienced a complete economic recession cycle. The dot-com bubble of 2001 and the financial crisis of 2008 both occurred before Bitcoin’s inception.

Current data does indicate a slowdown in the economy: weak job growth, declining consumer spending, cautious business investment, and food inflation putting pressure on the middle class.

If these trends continue, a recession may indeed be imminent in 2026. At that point, liquidity injections, regulatory leniency, and the reconciliation between Trump and Musk could all become ineffective. Bitcoin will face a true stress test.

This is why JPMorgan Chase, while setting a target of $170,000, also emphasized the need for “leverage rebalancing”; and why Raoul Pal, while optimistic about 2026, acknowledged that “the market will be volatile before the start of implicit QE.” They are all waiting for confirmation: whether the economy can achieve a soft landing.

When will the government reopen? When will the Clarity Act be passed? Will the Federal Reserve cut interest rates in December? What will be the outcome of the 2026 midterm elections? The answers to these questions will determine the short-term trend of Bitcoin.

But the longer-term question is: how will Bitcoin perform in the next economic recession? The answer may not be revealed until 2026. Until then, traders will continue to debate, and the market will continue to fluctuate. The only certainty is that uncertainty itself remains the greatest certainty.