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Modern a report by digital asset research firm 10x Research highlights that the US Federal Reserve’s (Fed) stance on interest rate cuts remains the most important hurdle that could dampen Bitcoin’s (BTC) current rally.
Trump-fueled Bitcoin rally in danger ahead of FOMC meeting
Since pro-crypto Republican candidate Donald Trump cruised to victory in the presidential election in November, Bitcoin has surged a staggering 47%, rising from around $67,500 on November 4 to around $99,700 as of January 6.
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While further gains are expected during the so-called “Trump rally” leading up to his inauguration on January 20, momentum may stall before the Federal Open Market Committee (FOMC) meeting later in January, says Markus Thelen of 10x For research.
Thielen expects a “positive start” to January for Bitcoin, followed by a slight decline before the release of consumer price index (CPI) inflation data on January 15. A positive CPI report could ignite optimism, which could lead to another rally before Trump’s inauguration. However, Thelen warns that bullish momentum may wane ahead of the Federal Open Market Committee meeting on January 29.
The latest data from CME Group’s FedWatch tool shows that interest rates are likely to remain unchanged after the next Federal Open Market Committee meeting. The tool currently forecasts a 90.9% chance that interest rates will remain at 425 and 450 basis points (BPS).
Bitcoin’s nearly 15% drop to $92,900 after the FOMC meeting on December 18 underscores the Fed’s outsized influence. The decline came after the Fed signaled only two interest rate cuts for 2025 instead of five, reinforcing Thelen’s view that the Fed’s decisions are the “main risk” to Bitcoin’s current bull run. Thielen stated:
We expect inflation to decline this year, although it may take some time for the Fed to formally recognize and respond to this shift.
Thielen also pointed to institutional participation as a key factor influencing Bitcoin’s price movement in the short-term, with metrics such as stablecoin mintage rates and exchange-traded fund (ETF) flows serving as indicators of institutional interest.
Institutional interest in Bitcoin continues to rise
Although US-based Bitcoin ETFs faced significant outflows at the end of December, the new inflows sparked optimism about rising institutional interest in the leading cryptocurrency. Data SoSoValue reports that spot bitcoin ETFs saw inflows of $908 million on January 3.
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In addition, many major BTC mining companies such as Mara and Hut 8 It is working to boost its Bitcoin reserves. Recently, technology companies such as the Canadian-based video sharing platform Rumble have also done so unveil $20 million BTC treasury strategy.
A separate report from cryptocurrency exchange Bitfinex He predicts Bitcoin could rise to $200,000 by mid-2025, despite minor price declines. At press time, Bitcoin is trading at $101,555, up 3.7% over the past 24 hours.
Featured image from Unsplash, charts from 10x Research, CME FedWatch, and Tradingview.com
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