As a crypto investor, I’ve noticed that the recent dip in Bitcoin’s value might be due to worries about the U.S. Federal Reserve tightening its monetary policy. This could potentially be the primary factor shaping Bitcoin’s price movements throughout 2025, according to experts I follow on CryptoMoon.
Fed monetary policy concerns push BTC price lower
On January 7th, Bitcoin’s price broke through the significant $100,000 level for the first time since December 19th, according to CryptoMoon Markets Pro data. However, it subsequently experienced a correction and fell back down to approximately $92,500.
The significant drop in Bitcoin’s price to around $92,500 can primarily be attributed to escalating worries about the Federal Reserve’s anticipated tighter monetary policies in 2025, as suggested by Ryan Lee, the lead analyst at Bitget Research.
The analyst told CryptoMoon:
“Bitcoin’s dip stems primarily from strong US economic data pointing toward potential interest rate hikes. This development makes cryptocurrencies less attractive as investments, while the Federal Reserve’s signals of tighter monetary policy further intensify market corrections.”
Economic indicators showing robustness have pushed back predictions for a possible interest rate reduction by the Federal Reserve, leading market participants to anticipate the initial rate decrease on June 18th, as suggested by the most recent projections from the CME Group’s FedWatch tool.
It’s anticipated that during the Federal Reserve’s meeting on January 29th, there is approximately a 95.2% likelihood that interest rates will stay at their current levels.
In the last 24 hours, corrections in Bitcoin’s price have resulted in a liquidation of approximately $631 million from highly-leveraged long positions, according to information provided by CoinGlass.
A significant sell-off might trigger a period of consolidation, according to Lee, as traders scale back their highly leveraged investments.
“The interplay between macroeconomic indicators and crypto market dynamics will remain a critical factor influencing investor behavior and overall market performance in the coming weeks.”
Bitcoin drop to $90,000 could happen before real rally begins
According to some financial experts, it’s possible that the value of Bitcoin could dip under $90,000 initially, but then it might surge and climb above the $126,000 mark, showing a robust upward trend.
According to John Glover, the top executive at Ledn and a former manager at Barclays, Bitcoin’s future trend appears optimistic in the long run. However, he suggests that Bitcoin might experience another price correction as a means to wrap up this phase of reduced trading activity during holidays.
Glover told CryptoMoon:
“This could lead us to test the $90,000 level again before the next significant move higher. Using wave analysis, we appear to be completing what I view as the fourth wave, suggesting a rally toward the $126,000–$128,000 range following this consolidation phase.”
According to well-known crypto analyst Rekt Capital in a recent post on January 8th, it’s crucial for Bitcoin to maintain its value above the $91,000 threshold to minimize further potential losses.
“Bitcoin has failed its Daily retest, losing $101165 (black) convincingly as support. As a result, Bitcoin has reverted back into its $91000–$101165 range once again.”
Despite some reservations, analysts continue to express a positive outlook on Bitcoin’s price movement, projecting a potential cycle peak surpassing $150,000 around 2025’s end. This optimism stems from predictions of a significant expansion in the global money supply by up to $20 trillion, which could potentially draw approximately $2 trillion in investment towards Bitcoin.
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2025-01-08 21:02