Bitcoin's $120K Milestone: How Trade Truces and Tax Reforms Ignited the Crypto Bull Run

The cryptocurrency market has long been a barometer of global economic uncertainty. But Bitcoin's ascent to $120,000 by mid-2025 defies that narrative—instead, it signals a confluence of deliberate policy shifts and institutional adoption. Let's unpack the macroeconomic catalysts driving this historic rally, and why this bull run feels different.

The Trade Truce: Uncertainty's Erosion Fuels Risk-On Appetite

The partial pause in Trump's trade war—extending tariff deadlines and dialing back threats—has been a quiet catalyst. By delaying new levies on imports until August, the administration gave businesses a reprieve from the “cloud of uncertainty” that had frozen capital allocation. As Susan Spence of the Institute for Supply Management noted, erratic tariffs had made pricing unstable, but this pause allowed manufacturers to resume investments.

This stability created a fertile environment for risk assets. Bitcoin, often perceived as a hedge against geopolitical instability, surged as trade tensions eased. The correlation is stark: Bitcoin's April 2025 rebound to $85K coincided with a lull in U.S.-China tariff threats, while its July ascent to $120K followed further de-escalation.

Tax Reforms: Fueling Capital Investment and Crypto Demand

The 2025 tax reforms, mirroring 2017's 100% bonus depreciation for machinery investments, have reignited corporate spending. By reducing costs for businesses to modernize factories and R&D, these policies are pumping liquidity into the economy. Leigh Lytle of the Equipment Leasing and Finance Association emphasized the reforms provided “long-term certainty,” driving accelerated purchases.

This economic tailwind indirectly supports Bitcoin's rise. As businesses reinvest, disposable income grows, and speculative appetite for alternative assets like Bitcoin expands. However, lingering tariffs on steel and aluminum—adding $10B annually to production costs—highlight a critical tension: fiscal incentives vs. protectionist drag.

Institutional Adoption: Bitcoin's Legitimacy Leap

The real game-changer is Bitcoin's integration into mainstream finance. Stablecoins like FIUSD (backed by Fiserv and Mastercard) now enable instant settlements across 150 million merchants. Coinbase's Shopify partnership and the Lightning Network's enterprise adoption—evident in Square's POS terminal integration—are turning Bitcoin from a speculative asset into a transactional tool.

Regulatory clarity has accelerated this shift. The GENIUS Act's framework for stablecoins and Dubai's VARA regulation for crypto have built trust. Meanwhile, Bitcoin ETF inflows hit $235M in late 2024, with experts predicting $120K by Q2 2025—now validated.

Risks Lurking in the Bull Run

No rally is without pitfalls. While Bitcoin's infrastructure matures, altcoin volatility persists—Bybit's $1.5B hack in February 2025 underscores systemic risks. Additionally, tariffs on copper (a key Bitcoin mining input) could squeeze miners' margins.

Yet stablecoins like USDC (Circle-backed) and institutional-grade protocols like Amboss Rails (offering 1-4% APY) are mitigating these risks. For now, Bitcoin's utility as a yield-generating, cross-border settlement asset outweighs these concerns.

Investment Implications: Ride the Bull, but Stay Vigilant

• Entry Points:
• Bitcoin ETFs: Low-cost exposure to the price appreciation, with tax advantages.
• Stablecoin Exposure: Invest in firms like Mastercard or Circle, which are bridging crypto and fiat.

• Infrastructure Plays: Companies building Lightning Network solutions (e.g., Blockstream) may see rising demand.

• Risks to Monitor:

• Tariff Reversals: Watch for new levies on tech or mining equipment.
• Regulatory Overreach: Excessive scrutiny could spook institutional investors.

Final Take

Bitcoin's $120K milestone isn't a fluke—it's the culmination of deliberate policies reducing macro uncertainty and institutionalizing crypto's role in global finance. While risks remain, the alignment of trade truces, tax reforms, and regulatory clarity creates a bullish cycle. For investors, this is a moment to allocate cautiously, but decisively, to an asset class that's proving its staying power.

The question isn't whether Bitcoin can climb higher—it's how much higher it can go as these macro trends solidify.