A potential surge in Bitcoin prices, driven by Donald Trump’s presidency and anticipated before his January 20th inauguration, might start to diminish near the end of the month. This is due to the Federal Reserve releasing their initial interest rate decision for the new year.
As a crypto investor, I found myself intrigued by the predictions made by Markus Thielen, founder of 10x Research, in his report dated January 5th. According to him, we were off to a promising start for early January, but he cautioned that there might be a mild correction before the release of the Consumer Price Index inflation data on the 15th. However, if his predictions hold true, we can expect another rally prior to Trump’s inauguration.
Thielen stated that a positive Consumer Price Index (CPI) reading might spark optimism, leading to an upward trend in the market, possibly extending until President Trump’s inauguration.
Nevertheless, this positive trend might slow down, as the market could potentially take a step back before the FOMC meeting scheduled for January 29.
According to CME Group’s FedWatch tool, there is a high probability of about 88.8% that the U.S. federal target rate will stay within the range of 4.25% to 4.50% after the FOMC meeting on January 29th.
During the Federal Open Market Committee (FOMC) meeting on December 18th, Bitcoin experienced a significant drop of nearly 15%, reaching approximately $92,800. This dip occurred after the FOMC revised downward their projection for interest rate cuts in 2025 from five to two.
In Thielen’s view, effective communication by the Federal Reserve could potentially trigger a surge in Bitcoin prices in the year 2025.
“We anticipate lower inflation this year, though it may take some time for the Federal Reserve to recognize and respond to this shift formally.”
A significant aspect to consider is how quickly institutional investors might reenter the cryptocurrency market, as indicated by increases in stablecoin production and investments in spot Bitcoin exchange-traded funds (ETFs), according to Thielen’s observation.
Thielen expects Bitcoin to be in the $97,000 to $98,000 range by January’s end.
Currently, John Glover, the Chief Investment Officer at crypto lending firm Ledn, predicts that Bitcoin might drop to around $89,000 before experiencing a rebound. According to his forecast, it could then reach $125,000 by the end of the first quarter.
According to Glover’s prediction, Bitcoin could potentially fall back to around $100,000 again before attempting to advance towards $160,000 sometime between late 2025 and early 2026, as he shared with CryptoMoon.
Glover’s estimation of $160,000 is less aggressive compared to the forecasts by asset managers VanEck and Bitwise, which predict values of $180,000 and $200,000 respectively.
Even though temporary pessimistic forecasts are in play, the Crypto Fear and Greed Index – evaluating sentiment towards Bitcoin and other digital currencies – surged back into the “High Greed” range, reaching 76 out of 100 on January 5, as Bitcoin soared to $98,850.
On December 27, 2024, it moved out of the “Extreme Greed” area, remaining within the “Greed” region for the previous ten days.
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2025-01-06 06:25