BTC Price Volatility: What the Fed’s January Decision Means for BTC
BTC Price Volatility – Bitcoin (BTC) is expected to experience a rally in the days leading up to Donald Trump’s presidential inauguration on January 20, but this momentum could weaken toward the end of the month. The potential rally could be affected by the Federal Reserve’s first interest rate decision of 2025, set to be announced during the FOMC meeting on January 29.
Bitcoin’s Initial Surge and Potential Pullback
According to a report from 10x Research on January 5, founder Markus Thielen predicts a positive start for Bitcoin in early January, followed by a slight pullback before the release of Consumer Price Index (CPI) inflation data on January 15. If the inflation data is favorable, it could reignite optimism, sparking another rally as traders position for Trump’s inauguration.
However, Thielen cautioned that the momentum may wane ahead of the Federal Open Market Committee (FOMC) meeting on January 29, where the Fed’s interest rate decision will play a significant role. CME Group’s FedWatch tool currently shows an 88.8% chance that the US federal target rate will remain between 425 and 450 basis points following the FOMC meeting.
Bitcoin’s Volatility Amid Federal Reserve Policy
Bitcoin experienced a nearly 15% drop following the December 18, 2024 FOMC meeting, when the Federal Reserve revised its 2025 interest rate cuts forecast, reducing the number of cuts from five to two. Thielen believes that the Federal Reserve’s policies present the primary risk to Bitcoin’s rally in 2025, though he expects lower inflation in the coming year, which could eventually prompt a response from the Fed.
Institutional Investment and Bitcoin’s Potential
Another key factor influencing Bitcoin’s price is the pace at which institutional investors return to the crypto market, with indicators such as stablecoin minting and spot Bitcoin ETF inflows reflecting this trend. Thielen forecasts that Bitcoin will likely trade in the range of $97,000 to $98,000 by the end of January.
Diverging Price Predictions: $125,000 to $160,000
While Ledn’s chief investment officer, John Glover, suggested that Bitcoin might pull back to $89,000 before rebounding to $125,000 by the end of Q1 2025, Glover also sees Bitcoin possibly retracing to $100,000 before aiming for a $160,000 price target by late 2025 or early 2026. This estimate is more conservative than the $180,000 and $200,000 predictions made by asset management firms VanEck and Bitwise.
Market Sentiment: Extreme Greed Zone
Despite short-term bearish forecasts, Bitcoin’s price rose to $98,850 on January 5, causing the Crypto Fear & Greed Index to return to the “Extreme Greed” zone, with a score of 76 out of 100. This marks a significant shift from December 27, 2024, when the index had fallen out of the Extreme Greed zone, remaining in the “Greed” zone for 10 days.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Cryptocurrencies and stocks, particularly in micro-cap companies, are subject to significant volatility and risk. Please conduct thorough research before making any investment decisions.
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