As the second quarter of 2025 comes to a close, Bitcoin (BTC) recorded its strongest quarterly returns since the second quarter of 2020. Expectations of interest rate cuts from the Federal Reserve and an increase in the M2 money supply fueled optimism that this positive momentum may extend into the third quarter.
However, Bitcoin's upward trajectory may face obstacles, such as the potential threat of a trade war and the weight of historical market patterns.
Can Bitcoin challenge the historic crash in the third quarter of 2025?
Data from Coinglass showed that despite Bitcoin's value decline at the beginning of the year, it rebounded strongly in the second quarter. In the second quarter, Bitcoin recorded a return of 29.79%.
This represents one of its best quarterly performances since the second quarter of 2020, when Bitcoin saw a 42.33% increase.
Additionally, Bitcoin reached its all-time high (ATH) of over $111,900 in May, driven by favorable macroeconomic factors and increasing institutional adoption.
Although geopolitical tensions led to a correction that pushed Bitcoin below $100,000, it remained resilient and recovered most of its losses.
Data showed that Bitcoin's price reached $107,342, up 3% from last week. As the second quarter nears its end, attention turns to Bitcoin's performance in the upcoming quarter.
Historically, the third quarter has been the weakest for Bitcoin, with an average return of only 6.03%. However, opinions among market watchers vary regarding Bitcoin's potential performance in the coming months.
In a recent post on X, Ether analyst, Wiz, pointed to a rise in the volume of spot Bitcoin trades. He noted that a similar pattern was observed in the third quarter of 2024, leading to a price increase.
"I believe that reaching the all-time high price for Bitcoin (BTC) is just weeks away now," he stated.
On the other hand, Benjamin Quinn, CEO of Into The Cryptoverse, expects Bitcoin's price to hit its lows in August or September. This indicates a more cautious outlook for the coming months.
Bitcoin is likely to begin showing some weakness around mid-June, as the weakness of the third quarter starts to appear. The same thing happened in recent years, as Kawn wrote.
Macroeconomic forces that may determine Bitcoin's fate in the third quarter
With Bitcoin's outlook remaining uncertain, many upcoming events and macroeconomic factors could influence its trajectory in the third quarter of 2025. The first major event is the expected interest rate cut by the Federal Reserve.
According to CME FedWatch data, while only 20.7% of market participants expect the Federal Reserve to cut interest rates in July, the probability rises to 90.3% in September.
This sharp shift in expectations reflects growing confidence that the Federal Reserve will ease its monetary policy in the third quarter. This could be a strong driver for cryptocurrency markets, including Bitcoin.
Moreover, the money supply (M2) is expected to continue rising during the third quarter. According to analyst Cass Abi, the People's Bank of China injected 1.5 trillion yuan into the economy through reverse repo agreements this week.
This move, part of broader efforts to stimulate economic growth, could lead to increased market liquidity. This, in turn, may boost demand for assets like Bitcoin, as investors seek alternatives amid an expanding money supply.
The main reason for this is the decline of the US Dollar Index (DXY), allowing other countries the freedom to print more without worrying about the depreciation of their currencies. All this is driving the global money supply (M2) to new record levels, meaning that Bitcoin (BTC) will become stronger. Bitcoin's price is expected to range between $130,000 and $140,000 in the third quarter, added Abi.
At the same time, the rising US debt adds more appeal to Bitcoin as a hedge. It may attract interest from institutions and individuals, as investors seek alternatives to traditional assets amid increasing financial uncertainty.
But there is a significant countervailing force looming with the end of the 90-day tariff freeze imposed by Trump.
Only 13 days remain of President Trump's 90-day tariff suspension. This means that if no new trade agreements are made, tariff rates will rise on July 9 as follows: 1. Return of reciprocal tariffs between countries; 2. Tariffs of up to 50% on EU imports; 3. Tariffs of 30% on Chinese imports in effect; 4. Global tariffs of 10% in effect, as mentioned in the Kobyse message.
The resumption of the trade war may lead to volatility in Bitcoin prices, posing a historic challenge for the currency. Previous trade tensions have led to sharp price corrections.
Thus, the renewed talk of trade wars in the third quarter may undermine the positive effects of interest rate cuts and the growth of the money supply.