Bitcoin investors should prepare for potential losses as inflation concerns continue to overshadow the market, according to a recent report by Steno Research. Since mid-December, Bitcoin’s value has decreased by approximately 10%, slipping from a peak of around $106,000 to about $96,000 as of January 14. Steno anticipates further declines, with Bitcoin potentially dropping to $85,000 per coin.
The downturn is attributed to “ongoing repricing driven by an unfavorable macroeconomic environment,” with inflation taking a prominent role, Steno explained. Bitcoin’s derivatives markets are reportedly still overheated, suggesting a need for further unwinding of excess leverage during this repricing phase.
Persistent U.S. inflation could exacerbate the pressure on the cryptocurrency market, potentially worsening conditions before any recovery occurs, Steno warned. The agency also noted a significant reaction in the Bitcoin market to a positive U.S. jobs report on January 10, which caused Bitcoin’s price to fall below $93,000 as the U.S. dollar strengthened.
Futures markets currently forecast a less than 3% chance of an interest rate cut in January, according to CME FedWatch data. Zach Pandl, head of research at Grayscale, commented that Bitcoin faces challenges from the robust U.S. dollar, driven by hawkish Federal Reserve policies and tariffs.
Steno forecasts that the upcoming U.S. Consumer Price Index (CPI) report on January 15 will indicate higher-than-expected inflation, projecting an increase of 0.4% compared to the consensus of 0.3%. If this prediction proves correct, it could catch markets by surprise and apply additional downward pressure on digital asset prices, Steno suggests.
Despite the current gloomy outlook, Steno remains optimistic about Bitcoin’s future, predicting that 2025 will be a standout year for the cryptocurrency market. Bitcoin could reach $150,000 per coin, aided by favorable regulatory conditions, a supportive macroeconomic climate with declining interest rates and improved liquidity, and historically strong performance following Bitcoin halving events.