A recent analysis by 10x Research reveals that the United States Federal Reserve’s view on interest rate cuts presents the most critical obstacle to Bitcoin’s (BTC) current upward trend. Since Donald Trump, a pro-crypto Republican candidate, triumphed in the November presidential election, Bitcoin has surged by 47%, rising from about $67,500 on November 4 to nearly $99,700 as of January 6.
Expectations are high for Bitcoin's continued ascent during what is termed the "Trump rally" in the lead-up to the January 20 inauguration.
However, this growth may encounter setbacks as the Federal Open Market Committee (FOMC) meeting approaches later in the month, according to Markus Thielen of 10x Research.
Thielen foresees a strong beginning for Bitcoin in January, followed by a minor retreat before the Consumer Price Index (CPI) inflation data release on January 15. A favorable CPI report could rejuvenate optimism and potentially spark another rally prior to Trump’s inauguration. Nonetheless, Thielen warns that the bullish pace may lose steam in anticipation of the FOMC meeting on January 29.
Data from the CME Group’s FedWatch tool indicates that interest rates will probably remain steady after the forthcoming FOMC meeting, predicting a 90.9% likelihood of rates staying between 425 and 450 basis points (BPS). The significance of the Fed's impact was evident when Bitcoin dropped nearly 15% to $92,900 following the December 18 FOMC meeting. This decline occurred after the Fed indicated plans for only two rate cuts in 2025 rather than five, affirming Thielen’s perspective that the Fed’s actions constitute a primary risk to Bitcoin's current momentum. Thielen commented that while lower inflation is anticipated this year, the Federal Reserve might take time to formally acknowledge and react to this transition.
Thielen also identified institutional involvement as a crucial factor affecting Bitcoin’s short-term price shifts. Metrics such as stablecoin issuance rates and crypto exchange-traded fund (ETF) inflows are indicative of institutional interest.
Despite significant outflows from US spot Bitcoin ETFs at December's conclusion, recent inflows have renewed optimism regarding increased institutional interest in Bitcoin. According to data from SoSoValue, spot Bitcoin ETFs experienced $908 million in inflows on January 3.
Moreover, leading Bitcoin mining companies like MARA and Hut 8 are increasing their BTC holdings. Technology companies such as the Canada-based video-sharing platform Rumble have recently announced a $20 million BTC treasury initiative. Separately, a report from the cryptocurrency exchange Bitfinex forecasts that Bitcoin could rise to $200,000 by mid-2025, despite minor price corrections.
As of now, BTC is trading at $101,555, marking a 3.7% increase over the last 24 hours.