An updated report from 10x Research sheds light on the potential impact of the US Federal Reserve’s position on interest rate cuts on the ongoing Bitcoin (BTC) surge.
Bitcoin’s Rally Faces Challenges Before FOMC Meeting
Since the victory of pro-crypto Republican Donald Trump in the November election, Bitcoin has soared by 47%, climbing from around $67,500 on November 4 to roughly $99,700 as of January 6.
Despite expectations of continued growth in the “Trump rally” leading up to the January 20 inauguration, there may be a slowdown prior to the Federal Open Market Committee (FOMC) meeting later in January, according to Markus Thielen of 10x Research.
Thielen anticipates a strong start to January for BTC, followed by a minor decrease before the release of Consumer Price Index (CPI) inflation data on January 15. Positive CPI figures could reignite optimism and trigger another surge before the inauguration. However, Thielen warns that bullish momentum could weaken before the FOMC meeting on January 29.
Recent data from CME Group’s FedWatch tool suggests that interest rates are likely to stay the same following the upcoming FOMC meeting, with a 90.9% chance predicted for rates remaining between 425 and 450 basis points (BPS).
The drop in Bitcoin’s value to $92,900 after the December 18 FOMC meeting highlights the significant influence of the Fed. The decline occurred when the Fed hinted at only two rate cuts for 2025 instead of five, supporting Thielen’s belief that the Fed’s decisions pose a major risk to BTC’s upward trend. Thielen remarked:
We expect lower inflation this year, but it may take some time for the Federal Reserve to acknowledge and respond to this shift officially.
Thielen also pointed out that institutional involvement plays a crucial role in determining Bitcoin’s short-term price movements, with metrics like stablecoin creation rates and cryptocurrency exchange-traded fund (ETF) investments serving as indicators of institutional interest.
Increasing Institutional Interest in Bitcoin
Despite significant outflows from US spot Bitcoin ETFs in late December, new investments have sparked hope for growing institutional interest in the leading cryptocurrency. According to SoSoValue data, spot Bitcoin ETFs received $908 million in inflows on January 3.
Furthermore, major BTC mining companies such as MARA and Hut 8 are increasing their Bitcoin reserves. Technology firms like Canada-based video-sharing platform Rumble have recently unveiled a $20 million BTC treasury strategy.
According to a separate report from Bitfinex, Bitcoin could potentially reach $200,000 by mid-2025, despite minor price fluctuations. At the moment, BTC is trading at $101,555, marking a 3.7% increase in the last 24 hours.
