Bitcoin's volatility in 2025 reflects broader global macroeconomic shifts, as central banks and institutional investors respond to divergent economic signals. The Federal Reserve's rate cut in September 2025 weakened the dollar and increased risk appetite, while the European Central Bank maintained its inflation target amid slowing growth. This divergence has heightened Bitcoin's role as both a speculative asset and a strategic hedge. Bitcoin surged above $125,700 in early October 2025, driven by renewed institutional interest and fiscal stimulus measures, including the U.S. 2025 reconciliation bill and China's GDP expansion. Institutional adoption has grown, with 59% of investors allocating at least 10% to Bitcoin by Q2 2025. The iShares Bitcoin Trust (IBIT) has played a significant role in this shift, reducing Bitcoin's volatility by 75% compared to historical peaks, though it also introduces risks of sudden outflows if fiscal stimulus decreases.