Bitcoin (CRYPTO: BTC) reached a record high of $126,198 on Oct. 6, 2025. It had roughly doubled over the previous 12 months and soared 350% over the previous two years.

But as of this writing, Bitcoin trades at about $77,000. Let's review the five major factors that are weighing it down -- and where it might be headed over the next 12 months.

1. Rising interest rates and Treasury yields

When interest rates and short-term Treasury yields are low, many investors pivot toward riskier investments like cryptocurrencies and growth stocks. But when they rise, many investors shift their cash back toward safer fixed-income plays for higher, risk-free yields.

In 2024 and 2025, the Fed cut its benchmark rates six times. Those rate cuts, along with expectations for additional rate cuts in 2026, drove Bitcoin's price to its all-time high.

But throughout 2026, the Iran war, persistent inflation, and other macro challenges eventually drove the Fed to raise its rates for the first time in three years in September. That rate hike, along with expectations of future rate hikes, chilled the cryptocurrency market again.

2. Competition from stablecoins

Bitcoin's bulls believe the cryptocurrency will eventually be used for more money transfers and mainstream payments. However, its volatility still prevents it from replacing most fiat currencies.

Stablecoins, or cryptocurrencies pegged to a fiat currency, address that problem. They're tethered to the U.S. dollar, euro, and other top fiat currencies, but they can be held without bank accounts and easily transferred across blockchains.

Last November, Ark Invest's Cathie Wood -- one of the most prominent Bitcoin bulls -- trimmed her 2030 price target for the token from $1.5 million to $1.2 million. In a CNBC interview, she warned that "stablecoins are usurping part of the role that we thought Bitcoin would play."

3. The Binance hack

On Oct. 30, Binance -- the world's largest cryptocurrency exchange -- disclosed that hackers had stolen $6.3 billion from its platform. Binance halted its withdrawals and said it would cover the losses with its own funds. Still, that massive heist -- which some analysts are pinning on North Korea -- raised fresh questions regarding the security of cryptocurrency exchanges.

4. Quantum computing concerns

Bitcoin is stored in two parts: a public key, which can be shared with anyone, and a private key, which allows a person to access their funds. Today, it would take the world's most powerful supercomputer trillions of years to guess a private key based on a user's public key.

But in theory, quantum computers could eventually reverse-engineer any public Bitcoin key to find its private one through Shor's Algorithm, which spots hidden mathematical patterns in Bitcoin's Elliptic Curve Cryptography rather than guessing trillions of private keys.

Bitcoin's backers have already taken steps to "quantum-proof" their private keys, but the looming threat of a "Q-day" for the crypto market is casting a dark cloud over its future. Bitmine (NYSE: BMNR) Chairman Tom Lee, one of Bitcoin's earliest bulls, recently warned that Bitcoin's supporters still "haven't come to a consensus on how to prevent Q-day."

5. A lack of near-term catalysts

Lastly, Bitcoin lacks sufficient near-term catalysts to offset these challenges. Back in 2024, it benefited from the SEC's approval of its first spot-price ETFs, its latest halving (which halves its mining rewards every four years), and the Fed's three interest rate cuts. In 2025, it benefited from three additional rate cuts and the Trump Administration's crypto-friendly policies.

But over the next 12 months, Bitcoin won't benefit from any comparable catalysts. Its next halving won't happen until 2028, more rate hikes could occur, and the death of the CLARITY Act -- which was aimed at establishing a clear federal framework for regulating digital assets -- could prevent institutional investors from accumulating Bitcoin and other cryptocurrencies. All of these challenges could prevent Bitcoin from setting new record highs.

Leo Sun has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.

Disclaimer:This article represents the opinion of the author only. It does not represent the opinion of Webull, nor should it be viewed as an indication that Webull either agrees with or confirms the truthfulness or accuracy of the information. It should not be considered as investment advice from Webull or anyone else, nor should it be used as the basis of any investment decision.