Bitcoin rally may slow ahead of January FOMC meeting
Bitcoin's (CRYPTO:BTC) ongoing rally, buoyed by optimism surrounding inflation data and political events like Donald Trump's Jan. 20 inauguration, may experience turbulence later in the month due to the Federal Reserve's upcoming interest rate decision.
In a Jan. 5 report, Markus Thielen, founder of 10x Research, forecasted a strong start to January for Bitcoin.
He attributed the early-month momentum to favorable inflation expectations and excitement ahead of the inauguration.
Thielen suggested a temporary slowdown might occur after the Consumer Price Index (CPI) release on Jan. 15, followed by renewed optimism leading into the inauguration.
“A favorable inflation print could reignite optimism, fueling a rally into the Trump inauguration,” Thielen remarked.
However, he cautioned, “momentum may wane as the market anticipates the Federal Reserve's FOMC meeting on January 29.”
The CME Group’s FedWatch tool reflects an 88.8% probability that the Federal Reserve will maintain its target rate between 425 and 450 basis points.
Bitcoin's price saw a significant dip of nearly 15% to $92,800 following the Dec. 18 FOMC meeting, during which the Fed revised its anticipated 2025 rate cuts from five to just two.
Thielen pinpointed the Federal Reserve's policy stance as the "primary risk" to Bitcoin's rally in 2025, noting that the central bank's cautious approach to acknowledging lower inflation could delay market reactions.
Institutional investment, evidenced by increased stablecoin issuance and ETF inflows, is another factor shaping Bitcoin’s outlook.
Thielen estimates Bitcoin's price to hover between $97,000 and $98,000 by January's end.
John Glover, CIO of Ledn, offered a more volatile near-term prediction.
He suggested Bitcoin might dip to $89,000 before rebounding to $125,000 by the close of Q1.
Looking further ahead, Glover projects Bitcoin could reach $160,000 by late 2025 or early 2026.
As January unfolds, Bitcoin's performance will likely hinge on inflation data, Federal Reserve decisions, and institutional activity, providing both opportunities and risks for the cryptocurrency's trajectory.
At the time of reporting, the Bitcoin (BTC) price was $99,703.02.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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