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A recent one relationship Digital asset research firm 10x Research highlights that the US Federal Reserve’s (Fed) stance on interest rate cuts remains the most significant obstacle that could dampen Bitcoin’s (BTC) current rally.
Trump-fueled Bitcoin rally is at risk ahead of FOMC meeting
Since pro-crypto Republican candidate Donald Trump secured victory in November’s presidential election, Bitcoin has risen an impressive 47%, from around $67,500 on November 4 to around $99,700 on January 6.
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While further gains are expected during the so-called “Trump rally” leading up to the January 20 inauguration, the momentum could stall before the Federal Open Market Committee (FOMC) meeting in January, says Markus Thielen of 10x Research.
Thielen expects a “positive start” to January for BTC, followed by a slight decline before the release of consumer price index (CPI) inflation data on January 15. A favorable CPI report could reignite optimism, potentially fueling another rally before Trump takes office. However, Thielen warns that the bullish momentum may fade ahead of the FOMC meeting on January 29th.
The latest data from CME Group’s FedWatch tool shows that interest rates are likely to remain unchanged after the next FOMC meeting. The tool currently projects a 90.9% probability that interest rates will remain between 425 and 450 basis points (BPS).
Bitcoin’s drop of around 15% to $92,900 after the FOMC meeting on December 18 highlights the Fed’s significant influence. This drop came after the Fed signaled only two rate cuts for 2025 instead of five, strengthening Thielen’s view that Fed decisions represent the “primary risk” to BTC’s current bullish trajectory. Thielen said:
We expect lower inflation this year, although it may take some time for the Federal Reserve to formally recognize and respond to this change.
Thielen also cited institutional participation as a key factor influencing Bitcoin’s near-term price action, with metrics such as stablecoin minting rates and crypto exchange-traded fund (ETF) inflows serving as indicators of institutional interest.
Institutional interest in Bitcoin continues to grow
While U.S. spot Bitcoin ETFs saw significant outflows in late December, fresh inflows have sparked optimism about growing institutional interest in the leading cryptocurrency. Data from SoSoValue finds that spot Bitcoin ETFs saw inflows of $908 million on January 3.
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Furthermore, several major BTC mining companies such as MARA AND Hut 8 they are strengthening their BTC reserves. Recently even technology companies such as the Canadian video sharing platform Rumble revealed a $20 million BTC treasury strategy.
A separate report from cryptocurrency exchange Bitfinex predicts Bitcoin could rise to $200,000 by mid-2025, despite minor price declines. At the time of writing, BTC is trading at $101,555, up 3.7% in the last 24 hours.
Featured image from Unsplash, charts from 10x Research, CME FedWatch and Tradingview.com