A Trump-led Bitcoin rally — expected to occur in the days leading up to his Jan. 20 inauguration — could wane toward the end of the month as the Federal Reserve publishes its first interest rate decision of the new year.
In a Jan. 5 report, 10x Research’s founder Markus Thielen predicted a “positive start” in early January would be followed by a slight pullback ahead of Consumer Price Index inflation data on Jan. 15 before rallying again ahead of Trump’s inauguration.
“A favorable inflation print could reignite optimism, fueling a rally into the Trump inauguration,” Thielen said of a potentially positive CPI result.
“However, this momentum may wane, with the market likely retreating somewhat ahead of the FOMC meeting on January 29,” he said.
Bitcoin’s projected path for January 2025. Source: 10x Research
CME Group’s FedWatch tool currently shows an 88.8% chance the US federal target rate will remain between 425 and 450 base points following the FOMC’s Jan. 29 meeting.
Bitcoin fell nearly 15% to around $92,800 after the FOMC meeting on Dec. 18, where it trimmed the number of 2025 projected interest rate cuts from five to two.
Thielen said the Federal Reserve's communication is the “primary risk” behind a Bitcoin rally in 2025, according to Thielen, adding:
“We anticipate lower inflation this year, though it may take some time for the Federal Reserve to recognize and respond to this shift formally.”
Another key factor will be the pace at which institutional investors return to the crypto market, reflected through stablecoin minting and spot Bitcoin exchange-traded fund inflows, Thielen noted.
Thielen expects Bitcoin to be in the $97,000 to $98,000 range by January’s end.
Meanwhile, crypto lending firm Ledn’s chief investment officer John Glover says Bitcoin could pull back to $89,000 before it bounces back, hitting $125,000 by the end of the first quarter.
From there, Bitcoin may retrace to $100,000 once more before it makes an attack toward $160,000 in late 2025 or early 2026, Glover told Cointelegraph.
Glover’s $160,000 estimate is more conservative than the $180,000 and $200,000 predictions by asset management firms VanEck and Bitwise.
Despite the bearish short-term outlooks, the Crypto Fear and Greed Index, which measures market sentiment for Bitcoin and other cryptocurrencies, returned to the “Extreme Greed” zone with a score of 76 out of 100 on Jan. 5 as Bitcoin increased to $98,850.
It fell out of the Extreme Greed zone on Dec. 27, 2024, staying in the “greed” zone for the last 10 days.
Crypto Fear and Greed Index score. Source: Alternative.me
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