4 Central Bank Moves That Might Fuel Bitcoin's Next Rally to $150,000 and Beyond

Key Points

• Bitcoin is highly correlated with global liquidity.

• Many central banks are taking actions that increase liquidity.

• At least a handful of those banks are expected to maintain those policies.

• 10 stocks we like better than Bitcoin ›

When money is easier to access and cheaper to hold, risk assets usually catch a tailwind, and Bitcoin (CRYPTO: BTC) in particular tends to be a major beneficiary.

Right now the next gusts for the coin's money-catching sails could come from four policy decisions by central banks around the world. If two or more of those central banks decide to move in the same direction, a Bitcoin move toward $150,000 becomes very feasible. Here's what's being considered and why it matters so much for this asset in the near term.

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Why central banks tend to move markets

At the crux of the central bank moves is the concept of liquidity. You can think of liquidity as how abundant and easy money is across the financial system.

When central banks cut their interest rates or slow the pace of offloading assets from their balance sheets, bank reserves and credit conditions improve, increasing liquidity, and investors are more willing to hold volatile assets. Historically, Bitcoin has tended to rise and fall with increases or decreases in the pace of global money supply growth, even if the fit is not perfect on a month-to-month basis. More practically, as a result of that tendency, the current market treats Bitcoin as a liquidity-sensitive asset that trades in line with broader risk appetite.

So here are the four policy signals that could open the taps.

First, the Federal Reserve is expected to cut interest rates in September. In the same vein, the Fed has already slowed quantitative tightening twice, most recently trimming its monthly U.S. Treasury runoff limit to $5 billion starting on April 1, a move that directly reduces the drain on bank reserves and thus increases liquidity. Slower runoff of Treasuries means more reserves; lower policy rates reduce the opportunity cost of holding volatile assets. More cuts later this year remain a possibility, but the takeaway here is that the U.S. central bank's near-term direction is toward easier policy, which benefits Bitcoin.

The Fed isn't alone in cutting rates, though; the European Central Bank (ECB) could choose to cut its rate even further, which would be the second move that could fuel Bitcoin's rise. The ECB has already delivered multiple cuts through early 2025 as inflation slowed. The door is not shut on more easing later this year if growth cools. Additional cuts would support euro-area credit and contribute toward global liquidity conditions.

The third central bank move that could send Bitcoin skyward is if the Bank of Japan (BOJ) reins in its yield spikes. The BOJ began normalizing interest rates in 2024, but it has repeatedly signaled flexibility to increase bond buying if necessary. The central bank's governor has also warned about potential ripple effects from swings in super-long bonds, reinforcing that the bank stands ready to act. But as of now, it's unclear whether the bank will opt to hike or lower the country's main interest rate.

Finally, central banks across other developed economies could also stoke more liquidity in the rest of 2025 and beyond. Outside Japan, developed-market central banks have racked up a sizable tally of cuts in 2025, even as the pace has slowed. Others, like Sweden and New Zealand, are positioned to make even more cuts. The cumulative bias still points toward easier policy if growth is inconsistent or threatened.

Don't wait to act, and don't bet the farm

Central banks are always making changes that filter through to Bitcoin. At the moment most of those potential changes point to more upside for the coin. But that won't always be the case.

If inflation accelerates or stays near levels that historically pressure risk assets, the rally could slip or turn into a long leg downward. At the same time, it isn't feasible for the average investor to predict the state of the global economy years in advance by analyzing what central banks are likely to do. And there's always going to be little clues that can scare you away from any investing whatsoever, even when it would eventually prove to be profitable.

So assuming you do not need the capital for at least five years, dollar-cost averaging modest amounts of money into Bitcoin remains a sound strategy. It lowers regret risk, keeps you invested through global policy changes, and aligns your plan with the driver that matters most for Bitcoin over time: its persistent scarcity meeting periodic waves of easier money over time.

Let the central banks do as they please. Just make sure that you're positioned to benefit regardless of whether the asset's price goes up or down.

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Alex Carchidi has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.